A home, available for sale, is shown on August 12, 2021 in Houston, Texas.
Brandon Bell | Getty Images

Sales of existing homes in July rose 2% from June to a seasonally adjusted, annualized rate of 5.99 million units, according to the National Association of Realtors.

These sales figures are based on closings, so they reflect contracts signed in May and June. Sales were 1.5% higher than July 2020. That is the second straight month of gains after a pullback in the spring.

Sales are likely improving due to rising supply. The inventory of homes at the end of July stood at 1.32 million, down 12% from a year ago, but that is a smaller annual decline than in recent months. At the current sales pace, that represents a 2.6-month supply. A six-month supply is considered a balanced market between buyers and sellers.

Despite the slight increase in supply, demand continued to outpace it, pushing prices to another all-time high.

The median price of an existing home sold in July was $359,900. That is a 17.8% increase compared with July 2020. Some of that price rise is skewed by the types of homes currently selling, and the market is much more active on the higher end. Annual price gains were larger last month, but given the huge spike in the market last summer, comparisons are now going to be smaller.

“The housing sector appears to be settling down,” said Lawrence Yun, chief economist for the Realtors. “The market is less intensely heated as before.”

It may be cooling, but it still appears to be competitive. Homes are spending, on average, just 17 days on the market. First-time buyers represented just 30% of the market, whereas they are usually around 40% historically. Nearly a quarter of all buyers are using all cash, also a higher share than normal.

The latest read on sales of newly built homes from June showed a sharp decline both monthly and annually, according to the U.S. Census. That data set is based on signed contracts, so it is looking at roughly the same activity as the July data on existing homes. Newly built homes come at a price premium to similar-sized existing homes, and builders say they are now seeing even more buyers unable to afford what they would like.

Mortgage rates didn’t move much throughout May and June, when the bulk of these deals were made, but they did fall more sharply in July. That, in addition to increasing supply, could help boost sales at least slightly in the coming months. Mortgage applications to purchase a home, however, continue to run at a far slower pace that a year ago, according to the Mortgage Bankers Association.

“Continued economic recovery is key to maintaining sales momentum, and anything that disrupts progress, such as rising Covid cases, could knock home sales off course,” said Danielle Hale, chief economist at Realtor.com. “Still, with listing price growth beginning to recalibrate in response to shifting supply and demand dynamics, we should see a steady pace of home sales over the next few months, especially if mortgage rates remain low.” 

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First-time filings for unemployment insurance hit a pandemic-era low last week, a sign that the jobs market is improving heading into the fall despite worries over the delta Covid variant.

Jobless claims for the week ended Aug. 14 totaled 348,000, the Labor Department reported Thursday. That was below the Dow Jones estimate for 365,000 and a decline of 29,000 from the previous week.

The last time claims were this low was March 14, 2020, just as the Covid-19 pandemic declaration hit and sent the U.S. economy spiraling into its deepest but briefest recession on record.

In the weeks that followed, more than 22 million Americans would be sent to the unemployment line, sending the jobless rate skyrocketing to 14.8%. The jobs market has been on a steady recovery trajectory since then but remains well off its pre-pandemic health.

Stocks were volatile following the news, with the Dow Jones Industrial Average well off its lows for the morning and down just slightly in early trading.

Continuing claims also fell, dropping to 2.82 million on a 79,000 decline from the week before. That data runs a week behind the headline claims number and also represented a new low since the pandemic struck.

The total of those collecting benefits under all programs fell to 11.74 million, a decline of 311,787 for the week ended July 31 and owing mostly to a big drop in those receiving enhanced benefits, which will come to a complete close in September. A year ago, the total under all programs stood at 28.7 million.

A sizable chunk of the decline in claims came from Texas, which fell by 8,311, according to unadjusted data. Illinois also declined 3,577 and Michigan was lower by 2,188.

Overall, the drop could be good news for a jobs market that has seen nonfarm payrolls increase by 2.5 million over the past three months and the unemployment rate fall to 5.4% from 6.3% at the beginning of the year. Thursday’s data reflects the period the Labor Department uses as its survey week for the monthly nonfarm payrolls count.

There remains, however, a large jobs gap, with some 6 million fewer Americans considered employed now than prior to the pandemic. There also were 8.7 million workers looking for jobs in July, though that was well below the 10 million or so job openings in the U.S.

Economists see a multitude of reasons for the inability to get back to full employment. Among them are ongoing fears about the pandemic, workers pressing for higher wages and the enhanced government benefits that have lowered the incentives for taking jobs.

Wages have been increasing in response to the current conditions, with average hourly earnings up 4% year over year in July. Prior to the pandemic, that would have been a record in data going back to March 2007.

A separate report Thursday showed the pace of manufacturing growth in the Philadelphia region slowed in August. The Philadelphia Fed’s manufacturing index declined to 19.4 from 21.9 the month before. The reading represents the percent difference between firms seeing expansion vs. those seeing contraction. The level was below the Dow Jones estimate of 22.

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