Markets in a Minute, Housing Market News, August 29, 2023

This week’s financial and housing market activity update…

The Economy

• So far in August, the number of initial claims for unemployment insurance in the U.S. has continued to move down. This indicates a healthy job market overall. New applications for unemployment dropped to 230,000 last week, and insured unemployment inched down to 1.1%.
• Recent consumer and CEO sentiment surveys have recorded improvements as the economy displays resilience, but small business confidence is back at an all-time low, according to new data collected by CNBC.
• Credit card spending, which has been a significant force in the economy, is showing signs of slowing. Consumers have begun to feel the pinch of higher rates, and other headwinds are beginning to pile up.

Housing Market News

• In July, the median home price reached $406,700, up 1.9% from last year. However, sales of previously owned homes dropped 2.2% from June to 4.07 million units, down 16.6% from the previous July. Sales fell in all regions except the West, where they rose 2.7%, with the Northeast seeing the steepest decline at 5.9%*.
• Housing inventory remains limited, with only 1.11 million homes available, down 14.6% from the prior year and half of pre-Covid levels. The shortage, along with higher mortgage rates, continues to drive decreased sales. Homes spent an average of less than a month on the market, and around 30% sold for above list prices. 
• Prices rose throughout the U.S. excluding the West. Homes priced over $1 million had the smallest drop in sales due to greater supply relative to demand at the high end. Cash transactions were significant, making up 26% of deals, while investors purchased 16% of homes. First-time buyers increased to 30% of home sales, up from June’s 27%. With their lower down payment requirements, Federal Housing Administration (FHA) loans have been on the rise as well.