As the holiday season approaches, investors saw new home sales jump. Additionally, home values rose this year. Many factors play a role in the increase, particularly limited inventory and inflation.
Currently, investors worry about future economic growth. This past month, the United States witnessed record-high inflation, supply chain struggles, and job growth struggles.
New Home Sales Jump
While personal income for average households declined, the Fed actively works to combat inflation. Meanwhile, new home sales jumped 14% from August 2021 to an annual rate of 800,000 units. Not only did new home sales soar well above the consensus forecast of 760,000, but they also hit the highest level since March of this year.
Also, the median new home price of $408,800 rose 19% higher than a year ago. In general, home supply dictates the pace of both new and previously owned sales. Builders point to shortages of key materials and skilled labor as obstacles to faster construction.
Sales of existing homes in September rose 7% from August. However, existing home sales remained a little lower than a year ago. Inventory levels dropped 13% from a year ago, at just a 2.4-month supply nationally. Overall, housing inventory fell well below the 6-month supply. Analysts consider a 6-month supply to be a healthy balance between buyers and sellers.
Job Creation Stifles Despite Supply Chain Struggles
The spread of COVID-19 led to major supply chain disruptions across sectors. As a result, investors experienced slow growth last quarter.
Third quarter gross domestic product (GDP), the broadest measure of economic activity, showed annualized growth of just 2.0%. This fell below the consensus forecast of 2.7%, and down from 6.7% during the second quarter.
Despite this data, the latest Employment report suggested that COVID-19 hindered job creation. Against a consensus forecast of 500,000, the economy added just 194,000 jobs in September, similar to August, but down from gains of over one million in July.
That said, on a more positive note, the unemployment rate declined from 5.2% to 4.8%, far below the consensus forecast of 5.1%, and to the lowest level since February 2020.
The Department of Labor releases the total number of new claims for unemployment insurance each week, and the latest reading was 290,000, the lowest level since March 2020 near the start of the pandemic. This declined significantly from the inflated figures in the millions seen last spring during the partial shutdown of the economy. However, unemployment insurance claims remain just a little above the readings around 250,000, typical of 2019.
Economic Promise as New Home Sales Jump
Heading into the holiday season, home buying tends to stagnate. Seeing new home sales jump offers a positive economic forecast.
Meanwhile, investors monitor inflation and job gains as the economy reopening continues despite tight COVID-19 regulations and supply chain bottlenecks. They anxiously await the fallout set for the coming months.
For further information on the jump in new home sales, get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office.
- If a party to the closing is not feeling well, please contact your closer before the closing so appropriate precautions can be taken.
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash their hands before entering our office.
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders.
- All pens used in the closing will be given to the client after use.
- All closing rooms will be cleaned and disinfected in-between each closing.
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will plan for delivery to the lobby or parking lot of our office.
- All staff will refrain from shaking hands before or after closings and ask clients to do the same.
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.