In the News – Existing Home Sales Suffer from Low Inventory
Despite favorable macroeconomic conditions, the recent pace of existing home sales has been weak. Sales fell 0.4% in May due to lack of inventory, which declined 2.8% for the month and is 6.1% lower than a year ago. Resale inventory has decreased on a year-over-year basis for 36 straight months. Pending existing home sales also declined in May and volume is 2.2% lower than a year ago.
June’s labor market report from the Bureau of Labor Statistics revealed an above-forecast jobs gain of 213,000. Though the unemployment rate increased to 4%, this was actually good news because it was due to an increase in the number of people looking for jobs, thus boosting the labor force participation rate to 62.9%. To sustain economic momentum late in the business cycle, additional workers need to come into the labor market. Some acceleration in wage growth, such as the 2.7% year-over-year gain in June, will help in this regard.
Year-to-date, new home sales for 2018 are up almost 9% compared to this time last year. Sales are up across most of the nation – increasing 15% in the Midwest, 11% in the West and 8% in the South. Only the Northeast recorded a decline (almost 4%). However, residential construction continues to be limited by the availability and costs associated with labor and materials. Nonetheless, builders continue to add workers – 4,800 more jobs in June – in anticipation of expanding construction volume. Still, the gains are not occurring fast enough to raise construction output above recent trends.
– NAHB Chief Economist Robert Dietz
Read more at NAHB