By Rom Badilla
Sales for previously owned homes rebounded in August by increasing 7.6 percent to an annualized pace of 4.13 million homes. The increase, which follows a revised prior period drop of 27.0 percent, was for the most part, in-line with consensus surveys as economists expected an increase of 7.1 percent or a pace of 4.10 million homes. While the jump in sales is encouraging, it is far from what is needed to stop the bleeding of further downward price pressures on housing. BNP Paribas stated in a morning email to clients the following:
“Nevertheless, the level of resales remained at a very depressed level and apart from the previous month reading is at the lowest level since 1996. The increase in sales in August pushed home inventories down by just 0.6% m/m, while the month-supply measure edged down to 11.6 from12.5 months previously. Apart from the previous month reading, the month’s supply measure was at the highest level since 1983. Excess housing supply, as well as additional supply from foreclosures and looming delinquencies, mean that housing prices will likely remain under pressure and continue trending lower throughout this year and next. Recent readings have already begun to slip after a period of stabilization that coincided with the home tax credit.”
People filing for first time unemployment benefits jumped to 465k people for the week ending September 18. Initial Jobless Claims for the prior week was revised slightly upward by three thousand to 453k. This week’s reading comes in worse than forecasts as economists expected a claims number of 450k. This brings the four-week moving average to 463,250 people, a slight tick down from 466,500 in the prior week.
As we have mentioned time and time again, the four week moving average has been hovering between 450k and 500k since last November, which is more in-line with stagnant growth or further job losses based off of previous cycles. Along those same lines, a moving average of below 400k is more in line with a recovery.
Continuing Claims for the week ending September 11 dropped to 4,489k from a revised prior period weekly reading of 4,537k. Economists expected Continuing Claims to decline further as surveys were at 4,473k. However, keep in mind that the drop doe not necessarily mean a pickup in hiring due to the fact that many are exhausting their government benefits as long-term unemployment plagues this economy. People filling for Extended Benefits increased by 94k from the prior week to 9,498k. In addition, people under Emergency Unemployment Compensation benefits increased as well to 4,222k, a move higher of just short of 114k from the previous week.