CCL Market Update

New Home Sales

New homes sales are up a monthly 12.4 percent to an annualized rate of 654,000. A small offset is a modest 10,000 downward revision of June which is now at a rate of 582,000, May remains the same unrevised at 572,000. The surge in sales can be explained by the seller discounting, as the median price fell 5.1 percent to $294,600. The yearly price is suddenly in the negative column at minus 0.5 percent, confirming other reports that price is soft. Lack of supply is becoming even more of an issue for housing. New homes in the market fell 7,000 in the month to a level of 233,000 with monthly supply falling to 4.3 months at the current sales rate from 4.9 months in June and a reading of 5.2 months a year ago. Though housing data has been moving higher it is not moving uniformly; starts and permits data have been bumpy as has construction spending. But this report shows data moving to cycle highs.

Mortgage Applications

Mortgage data is pointing to a slowing for home sales. Purchase applications slipped 0.3 percent in August 19 week and are at a new low for the year. At 8.0 percent, year on year growth is no longer in the double digits.

FHFA House Price Index

As mentioned above home sales are increasing and appear to be getting a lift from seller discounting. For the second month running, the FHFA house price index is up an unusually weak 0.2 percent. The yearly gain for June, which had been at 6.0 and 6.3 percent, as recently as April and March, is now at 5.6 percent.

Existing Home Sales

Prices are coming down, but sales aren’t going up for the month of July. Sales of existing homes have slowed to an annualized rate of 5.39 million which is below the low end of economists’ expectations and down 3.2 percent on the month. The yearly rate has been slowing and is suddenly in the negatives at minus 1.6 percent. The median price fell 1.4 percent to $244,100, the yearly rate is at plus 5.3 percent . Single-family homes are not a positive in this report but they are when compared with condo sales. Single family home sales fell 2.0 percent to a 4.82 million rate with condo sales down a sharp 12.3 percent to a 570,000 rate. Compared to a year ago single family home sales are in the negative column at minus 0.8 percent vs. an 8.1 percent decline for condos. The weakness in sales is a plus at least for supply which still remains low and is a key factor in holding down sales. Supply on the market rose 2.13 million from 2.11 million in June.

Jobless Claims

Historically low levels of layoffs continue to underscore the strength of the US labor market. Initial claims slipped 1,000 in the week of August 20th to 261,000 with the four week average down 1,250 to 264,000. Continuing claims in lagging data for the week of August 13th are down a sizable 30,000 to 2.145 million, the four week average is unchanged at 2.155 million. The unemployment rate for insured workers is at 1.6 percent, only 1 tenth off the all-time low. The August Jobless claims reports are only marginally above where they were in July, where they averaged 255,000


Second quarter GDP came in soft at only plus 1.1 percent annualized rate for the second estimate following even softer rates in the prior two quarters of 0.8 and 0.9 percent. Consumer spending, however, was very strong at 4.4 percent annualized growth rate, 2 tenths higher than the first estimate. Inventory is pulling down GDP by a steep 1.3 percentage points. But lighter inventory in times of slow economic growth is a positive for future production and employment. Residential investment in the second quarter fell at a 7.7 percent annualized rate. Strength in new home sales points to a rebound for the reading in the third quarter. The largest disappointment in the quarter was yet another decline in nonresidential fixed business investment which points to business caution and continuing problems ahead for worker productivity.

Consumer Sentiment

Consumer sentiment remains steady at 89.9 for the final August reading, a 6 tenths dip from the mid-month report and a 2 tenths dip from the final July data. The expectations component moved higher in the month to 78.7 which may be an indication of confidence in the jobs outlook. Current conditions are hinting at marginal softening in the current jobs market, it is down 2.0 points to a still solid 107.0. Inflation readings are especially weak in the report reflecting in part this month’s downturn in gas prices. One year expectations are down 2 tenths to 2.5 percent with the five year outlook down 1 tenth at 2.5 percent as well.