Housing Saw a Bounce: November 18 – 22

Home sales gained in October. Here are the five things we learned from U.S. economic data released during the week ending November 22.

Existing home sales improved in October. The National Association of Realtors reports sales of previously owned homes grew 3.4 percent to a seasonally adjusted annualized rate (SAAR) of 3.96 million units. Sales were up 2.9 percent from a year earlier. Sales increased in all four Census regions on both a month-to-month and year-to-year basis. Inventories continued to expand, adding 0.7 percent to 1.37 million units (equivalent to a 4.2-month supply). Inventories have swelled 19.1 percent over the past year. The median sales price of $407,200 represented a 4.0 percent gain over the past year. The press release exclaims that “the worst of the downturn in home sales could be over.”

Housing starts slowed in October. Housing starts declined 3.1 percent to a seasonally adjusted 1.311 million. The Census Bureau measure was 4.0 percent below year-ago levels. Starts grew during the month in the West and Midwest but declined in the Northeast and South. Starts were below year-ago levels in three of four Census regions (the Northeast being the exception). Looking towards the future, issued building permits were off 0.6 percent to an annualized 1.416 million units. Housing completions also slumped, decreasing 4.4 percent to an annualized 1.614 billion. Even with the decline, completions were 16.8 percent ahead of year-ago levels.

Homebuilders were slightly more confident in November. The National Association of Home Builders’ Housing Market Index (HMI) added three points to a seasonally adjusted 46. (The HMI is a diffusion index where a reading above 50 suggests more homebuilders see the housing market as “good” than as “poor.”). The HMI was up two points from a year earlier and sat at its highest reading since April. The HMI improved in the Northeast (59) and Midwest (49) and fell in the South (42) and West (39). The present single-family sales index added two points to 49, and the measure for sales over the next six months jumped seven points to 64. The prospective traffic index added three points to 32. 

Forward-looking economic measures slid again in October. The Conference Board’s Leading Economic Index (LEI) declined 0.4 percent to a seasonally adjusted 99.5 (2016=100). The measure has fallen 2.2 percent over the past six months. Only four of 10 LEI components made positive contributions to the index, led by the stock market. The Coincident Economic Index (CEI) was unchanged at 112.8 (+0.8 percent over the past six months). Two of four CEI components made positive contributions: personal income and manufacturing & trade sales. The Lagging Economic Index (LAG) slipped 0.1 percent to 118.7 (-0.8 percent versus April 2024). The press release said the data “continued to suggest challenges to economic activity ahead.”

Consumer sentiment improved or deteriorated based on one’s views of the election outcome. The University of Michigan’s Index of Consumer Sentiment added 1.3 points to a seasonally adjusted 71.8 (1966Q1=100). The index was 17.1 percent above year-ago levels. The current conditions index lost one point to 63.9 (-6.4 percent versus November 2023), while the expectations index added 2.8 points to 76.9 (+35.4 percent versus November 2023). The index was slightly off its pre-election “preliminary” November results. Republican survey respondents’ economic expectations rose sharply. Conversely, Democrats have become far more pessimistic about the future. The exact opposite occurred four years ago.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending November 16, 2024, First-Time Claims, seasonally adjusted): 213,000, -6,000 vs. the previous week, -11,000 vs. the same week a year earlier). 4-week moving average: 217,750 (-0.2% vs. the same week a year earlier).
• State Employment (October 2024, Nonfarm Payrolls, seasonally adjusted): Decreased in 2 states and held steady in 48 states and the District of Columbia vs. September 2024. Increased in 27 states and held steady in 23 states and the District of Columbia vs. October 2023.
• Treasury International Capital Flows (September 2024, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$263.1 billion (August 2024: +158.5 billion; September 2023: +$15.1 billion).

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