US existing home sales fall again in September; jobless claims fall

Oct. 20 (Reuters) – US existing home sales fell for the eighth straight month in September and are likely to decline further in the coming months as the housing market continues to differentiate as the economic sector takes the brunt of the recession. the Federal Reserve’s aggressive interest rate hikes.

The generally weak report from the National Association of Realtors on Thursday contrasted sharply with another strong reading from the U.S. labor market, with the Department of Labor reporting an unexpected drop in the number of people seeking unemployment benefits for the first time last week. .

The two reports illustrate the uneven impact seen so far from the Fed’s fastest series of rate hikes in at least four decades.

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The interest-rate-sensitive housing market, which boomed during the pandemic due to then-low borrowing costs and demand for more living space during the COVID-19 restrictions, was broadly driven by the increases as rates on the most popular form of home loan plummet to nearly zero. 7 rise. % – the highest in 20 years. But other areas of activity, from the labor market to consumer spending, have shown little effect so far, suggesting that the Fed may still have work to do to lower overall demand, which is keeping price pressures high.

The US central bank raised its benchmark overnight interest rate from near zero in March to its current range of 3.00% to 3.25%, and that rate is likely to end the year at the mid-4% mark, based on the the Fed’s own data. projections and recent comments.


Existing home sales fell 1.5% last month to a seasonally adjusted annual rate of 4.71 million units, the NAR said. Excluding the short-lived dip in the spring of 2020 as the economy recovered from the first wave of COVID-19, this was the lowest sales level since September 2012.

Economists surveyed by Reuters had predicted sales would fall to 4.70 million units. On a regional basis, sales declined in the Northeast, Midwest and South and remained unchanged in the West.

Home sales, which make up the bulk of US home sales, fell 23.8% year-on-year.

Data from this week showed that homebuilder confidence declined for the tenth straight month in October, and groundbreaking for new single-family housing projects fell to its lowest level in more than two years in September.

Outside a home in Washington, U.S., on July 7, 2022, there is a “For Rent, For Sale” sign. REUTERS/Sarah Silbiger

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Mortgage rates, which fluctuate with US Treasury yields, have risen even higher. The 30-year fixed mortgage rate averaged 6.94% last week, the highest in 20 years, up from 6.92% in the previous week, according to data from mortgage broker Freddie Mac.

NAR chief economist Lawrence Yun said September sales figures don’t reflect the latest rise in mortgage rates, which are up about a percentage point in a month. As a result, he expects the sales rate to fall further in the coming months, perhaps to 4.5 million per year, which would be about 4% to 5% lower than the current sales rate.

While house price growth has slowed as demand slows, tight supply is keeping prices high. The average price of an existing home rose 8.4% in September from a year earlier to $384,800. There were 1.25 million previously owned homes on the market, 0.8% less than a year ago.

“The details of the report suggest that housing is no longer a seller’s market,” wrote Aneta Markowska, chief financial economist at Jefferies. “Until this summer, house prices continued to rise despite declining demand, probably because supply was also dampened. But the balance of power is finally shifting from sellers to buyers.”


Meanwhile, little evidence has surfaced so far that the labor market is loosening significantly or that employers are switching to job cuts.

Initial state unemployment benefits claims fell unexpectedly by 12,000 to a seasonally adjusted 214,000 for the week ending Oct. 15, the Labor Department said. The data for the previous week was revised to show 2,000 fewer applications filed than previously reported. Economists polled by Reuters had forecast 230,000 applications for the past week.

The cabinet reported earlier this month that the number of job vacancies fell by 1.1 million, the biggest drop since April 2020, to 10.1 million on the last day of August. But economists don’t expect widespread layoffs as companies have been wary of releasing their workers after hiring problems over the past year as the pandemic forced some people to leave their workforces, partly due to long-term illness. by the virus.

The claims report showed that the number of people receiving benefits after a first week of aid, an indication of hiring, rose 21,000 in the week ending Oct. 8 to 1,385 million. So-called persistent claims have not materially deviated from that level for about six months and remain 400,000-500,000 below pre-pandemic levels.

“Even as the economy slows, employers seem reluctant to lay off workers they have struggled to hire and retain,” Nancy Vanden Houten, chief economist in the US at Oxford Economics, wrote in a note to clients. “We’re not looking for claims that fall much below current levels, but we also don’t expect a significant rise in claims or unemployment until we hit a recession in 2023.”

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Reporting by Dan Burns; Editing by Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

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