Summary for Week Ending Nov 30th

Overall the economic data was weaker than expected last week, even the housing data.  New home sales were at a seasonally adjusted annual rate (SAAR) of 368 thousand in October, below expectations of 387,000.  However sales are still up close to 20% from 2011.

Hurricane Sandy continues to negatively impact the economic numbers.  Personal income and outlays for October were especially weak, and weekly initial unemployment claims remained elevated. 

And, once again, the regional manufacturing surveys indicated contraction (except Richmond).

Overall this was a disappointing week, but it is difficult to separate out the underlying trend from the impact of Hurricane Sandy.

Of course most of the headlines last week were about the so-called "fiscal cliff".  Some news agencies are running embarrassing countdown timers, even though there is no drop dead date.  I still think a deal in early January is likely, although I'd like to see an agreement reached sooner.

Here is a summary of last week in graphs:

' New Home Sales at 368,000 SAAR in October

The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 368 thousand. This was down from a revised 369 thousand SAAR in August (revised down from 389 thousand).

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

This graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale was just above the record low in October. The combined total of completed and under construction is also just above the record low since "under construction" is starting to increase.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In October 2012 (red column), 29 thousand new homes were sold (NSA). Last year only 25 thousand homes were sold in October. This was the third weakest October since this data has been tracked (above 2011 and 2010). The high for October was 105 thousand in 2005.

New home sales have averaged 361 thousand SAAR over the first 10 months of 2012, up sharply from the 307 thousand sales in 2011. Also sales are finally at the lows for previous recessions too.

This was below expectations of 387,000.