Last week’s economic news included readings on sales of new and previously-owned homes along with final March index readings on consumer sentiment. Weekly readings on mortgage rates and jobless claims were also released.
Sales of New and Pre-Owned Homes Fall in February
Weather-related problems disrupted sales of new and previously-owned homes in February as low inventories of homes for sale further stalled sales. The National Association of Realtors® said that sales of new and pre-owned homes were slowed by persistent shortages of homes on the market.
Shortages of available homes were common before the pandemic and are more pronounced now. Realtor.com estimates that 200,000 homeowners stayed out of the market in the past year; this contributed to the two-month supply of homes available in February. Real estate professionals consider a six-month supply of homes for sale to indicate a balanced market. Sales of previously-owned homes were 9.10 percent higher in February 2020.
High demand for homes fueled competition among buyers and drove home prices higher. Rising mortgage rates, short supplies of homes, and rising home prices presented obstacles for first-time and moderate-income home buyers as the national median price for previously-owned homes reached $313,000.
New homes sold at a seasonally-adjusted annual pace of 775,000 sales in February according to the Census Department and was 18.20 percent lower than the reading of 948,000 new home sales reported in January. The inventory of new homes available rose to a 4.80 month supply as buyers were sidelined by winter weather and rising mortgage rates. Analysts expect high demand for new homes to continue as buyers move out of crowded urban areas and seek larger homes that meet increasing needs for work-at-home space and up-to-date technology.
Mortgage Rates Rise as Jobless Claims Fall
Freddie Mac reported higher average mortgage rates last week as rates for 30-year fixed-rate mortgages jumped eight basis points to 3.17 percent; the average rate for 15-year fixed-rate mortgages rose five basis points to 2.45 percent and the average rate for 5/1 adjustable-rate mortgages rose five basis points to 2.84 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable-rate mortgages averaged 0.20 percent.
New jobless claims fell to 684,000 claims from the prior week’s reading of 781,000 first-time jobless claims. Ongoing claims were also lower with 3.87 million continuing claims filed as compared to the previous week’s reading of 4.13 million continuing claims filed.
The University of Michigan reported an index reading of 89.1 for its Consumer Sentiment Index in March. February’s reading was 83.0 and analysts expected an index reading of 83.7.
This week’s economic reporting includes readings from Case-Shiller Home Price Index and reporting on pending home sales. Private and public sector job growth and the national unemployment rate will be released along with weekly reports on mortgage rates and jobless claims.