Housing activity and sentiment decelerated in February. Here are the five things we learned from U.S. economic data released during the week ending February 21.
Existing home sales stumbled in January. Sales of previously owned homes dropped 4.9 percent to a seasonally adjusted annualized rate (SAAR) of 4.08 million. This was the lowest reading for the National Association of Realtors measure since last October. Sales dropped in three of four Census regions, with transactions steady in the Midwest. Sales were up 2.0 percent from a year earlier. Inventories grew 3.5 percent to 1.180 million homes (+16.8 percent versus January 2024), the equivalent of a 3.5-month supply. The median sales price of $396,900 was up 4.8 percent from a year earlier. The press release notes that still-high mortgage rates and “elevated home prices” have led to continued housing affordability challenges.
Housing starts slowed in January. The Census Bureau reports housing starts tumbled 9.8 percent to a seasonally adjusted annualized rate (SAAR) of 1.366 million units. With the decline, starts were 0.6 percent off from year-ago levels. Starts fell from single-family (-8.4 percent) and multi-family (-11.0 percent) homes. Looking towards the future, the annualized count of issued building permits inched up 0.1 percent to 1.482 million (-1.7 percent versus January 2024). Housing completions rose 7.6 percent to an annualized 1.651 million units. Starts were 9.8 percent ahead of their year-ago pace.
Homebuilder confidence fell in February. The National Association of Homebuilders’ Housing Market Index (HMI) dropped five points to a seasonally adjusted 42, its lowest reading since September. A reading below 50 means more homebuilders view the housing market as “poor” than see it as “good.” The HMI fell in all four regions. The single-family home sales index declined by four points to 46, while the expected sales index plunged by 13 points to 46. The prospective buyers traffic measure slumped by three points to 29.
Consumer sentiment slid in February. The University of Michigan’s Index of Consumer Sentiment lost 7.0 points to a seasonally adjusted 64.7 (1966Q1=100). The measure was down 15.9 percent from a year earlier. The current conditions index plummeted 9.4 points to 65.7 (-17.3 percent versus February 2024), while the expectations index lost 5.5 points to 64.0 (-14.9 percent versus February 2024). Sentiment deteriorated among Democrats and independents but held steady for Republicans. One-year inflation expectations surged a whole percentage point to +4.3 percent. Anticipated longer-term term inflation was at +3.5 percent.
Initial jobless claims continued at a steady pace in mid-February. First-time claims made for unemployment insurance benefits declined by 1,000 to a seasonally adjusted 219,000 during the week ending February 15. Claims were up 19,000 from the same week a year earlier. The Department of Labor measure’s four-week moving average of 215,250 initial jobless claims was up 1.4 percent from a year earlier. 2.219 million people (not seasonally adjusted) were receiving some form of unemployment insurance benefits during the week ending February 1, up 2.2 percent from the same week a year earlier.
Other U.S. economic data released over the past week:
- Treasury International Capital Flows (December 2024, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$79.6 billion (November 2024: +$96.5 billion; December 2023: +34.3 billion).
- FOMC Minutes
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What We Learned About the U.S. Economy Last Week 