Home sales held firm in January, but overall economic activity may have slightly softened. Here are the 5 things we learned from U.S. economic data released during the week ending February 24.
Existing home sales hit another post-recession high in January. The National Association of Realtors reports that sales of previously owned homes increased 3.3% during the month to a seasonally adjusted annualized rate of 5.69 million homes (+3.8% vs. January 2016). Existing home sales have not been this strong since February 2007. Sales grew in the same 3 of 4 Census regions on both a month-to-month and year-to-year basis. Sales only slowed in the Midwest (-1.5% vs. December 2016, -0.8% vs. January 2016). As has been the trend in recent years, inventories of previously owned homes remained very tight during the month with only 1.69 million homes available for sale. While inventories had grown 2.4% during the month, it was off 7.1% from January 2016 and the equivalent to a ridiculously tight 3.6 month supply of homes. The median sales price blossomed 7.1% over the past year to $228,900. The press release links the robust housing market to “strong hiring and improved consumer confidence at the end of last year” but also warns tight inventories were “deteriorating affordability conditions.”
New home sales rebounded in January. The Census Bureau estimates new home sales grew 3.7% during the month to a seasonally adjusted annualized rate of 555,000 units. This had followed a 7.0% drop in December and left new home sales 5.5% above its January 2016 sales pace. Sales grew during the month in 3 of 4 Census regions: Northeast (+15.8%), Midwest (+14.8%), and the South (+4.3%). Sales slowed 4.4% in the West. 3 of 4 regions also had positive 12-month comparables, with the negative outlier being in the South (-1.0% vs. January 2016). Inventories of new homes have been gradually growing in recent months, expanding 3.5% in January to 265,000 units (+10.9% vs. January 2016). This was equivalent to 5.7 month supply. The median sales price of $312,900 was 7.5% above that of a year earlier.
It appears the rate of economic growth slowed during January. The Chicago Fed National Activity Index (CFNAI), a weighted average of 85 economic measures, was at -0.05 during January, down 23-basis points from the previous month. An index reading of 0.00 indicates economic growth at its historic rate, so January’s slightly negative CFNAI reading signified slower than normal growth. Among the 4 major categories of components to CFNAI, those associated with production made the biggest negative contribution to the overall index. Production-related indicators made a contribution to CFNAI of -0.07, down 25-basis points from its December 2016 contribution. Indicators tied to personal consumption and housing cost 5-basis points to the CFNAI, down from a -0.03 contribution a month earlier. Meanwhile, making small positive contributions to the CFNAI were those associated with employment (+0.06, up 7-basis points from a month earlier) and sales/orders/inventories (+0.02, down 2-basis points from December). The 3-month moving average slipped by a basis point to -0.03. A year earlier, this moving average was at -0.19.
Consumer sentiment slipped but remained solid in February. The Index of Consumer Sentiment from the University of Michigan lost 2.2 points during the month to a seasonally adjusted 96.3 (1966Q1 = 100). This was up 6/10ths of a point from the preliminary February reading reported several weeks ago and up 4.6 points from a year earlier. February’s decline was the product of lowered expectations for the future—the expectations index shed 3.8 points to a reading of 86.5 (February 2016: 81.9). The current conditions index edged up 2/10ths of a point to 111.5 (February 2016: 106.8). The press release noted that the 3-month moving average was at its highest point “in more than a decade” but also said that there was a significant partisan split in results with Democrats expecting a recession and Republicans anticipating “renewed robust economic growth.”
First-time jobless claims remain at 40+ year lows. Per the Department of Labor, there were 244,000 first-time claims made for unemployment insurance benefits during the week of February 18. This was up 6,000 from the previous week but 20,000 under the year ago count. The 4-week moving average of jobless claims of 241,000 was 9.8% below the moving average of a year earlier and its lowest point since July 21, 1973. In all, 2.508,785 people were receiving some form of unemployment insurance benefits during the week ending February 4 (-7.4% vs. a year earlier).
Other U.S. economic data released over the past week:
– FHFA House Price Index (December 2016, Purchase-Only Index, seasonally adjusted): +0.4% vs. November 2016, +6.2% vs. December 2015.
– FOMC meeting minutes
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Even with its recent increases, the moving average in initial jobless claims remained 3.7% below year ago levels and has stayed under 280,000 every week since early May. The 4-week moving average of continuing jobless claims was at 2.220 million for the week ending December 19, down 7.5% from the same week a year earlier. 
