Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
Initial claims for unemployment recently fell to 214,000, lower than the 230,000 Reuters forecast. Now you may ask yourself, "Well, how did I get here?" Sorry, was listening to the Talking Heads and that lyric come into my head. I meant to say, you may ask yourself, "I thought I heard companies were laying off a lot of people?" Actually, that’s not true. Here are weekly unemployment claims for the past five years, courtesy of my buddy FRED:
You’ll see that claims have remained at pre-pandemic levels since the beginning of 2022, with no major increase the past few weeks. Since weekly jobless claims are a leading economic indicator, this is good news for the labor market going forward. And as we learned two weeks ago, hiring remains brisk despite all the other bad economic news out there.
Unfortunately, that’s basically it for the good news this week. Sorry, but I can only work with the material I’m given. To keep it fair and balanced, I will only present one bad-news item.
Existing Home Sales Hit 10-Year Low in September
Sales of existing homes in the U.S. fell 1.5% last month to a seasonally adjusted rate of 4.71 million units. That marks the eighth-straight month of declining sales, and the lowest level since September 2012. One important caveat I need to mention is that this excludes the brief drop at the start of the COVID-19 pandemic. That said, sales are down 23.8% from a year ago, so pretty much any way you look at it, housing is struggling. We all know the reasons for this decline in activity over the past year, but rather than just state them, I want to play with my friend FRED more. So, here they are in chart form:
So, in summary, existing homes sales are falling—and will probably keep falling for a while—because over the past 12 months:
Mortgage rates have more than doubled
Stocks are down about 20%
Inflation hit a 40-year high and has barely come down
Home prices rose sharply in first half of 2022, which, combined with skyrocketing rates, have priced many buyers out of the market
Hopefully you won’t shoot the messenger, but instead just go out and have a great week.