U.S. job growth surged in February as the labor market continues to tighten, though wage growth cooled. The Bureau of Labor Statistics reported that Non-Farm Payrolls rose by 313,000 last month, well above the 210,000 expected. This was the largest gain since July 2016. December and January were revised higher by a total of 54,000. Big job gains were seen in construction followed by retail and professional and business services.
However, wage growth cooled rising just 0.1%, below the 0.2% expected, while year-over-year slowed to 2.6% from the 2.9 percent in January soothing fears of wage inflation. Within the report, the Unemployment Rate remained at 4.1 percent; the Labor Force Participation Rate rose to 63% from 62.7%. The U6 number, a measure of total unemployment, remained at 8.2%. Overall, it was a solid report.
Home prices continued to rise in December due in part to high demand and a shortage in homes for sale on the market. The S&P Case-Shiller 20-City Home Price Index rose 6.3 percent from December 2016 to December 2017, just below the 6.4 percent recorded in November. From November to December, prices were up 0.6 percent. David M. Blitzer, managing director and chairman of the index said, “Within the last few months, there are beginning to be some signs that gains in housing may be leveling off. Sales of Existing Homes fell in December and January. Pending Home Sales of existing homes are roughly flat over the last several months. New home sales appear to be following the same trend as existing home sales. While the price increases do not suggest any weakening of demand, mortgage rates rose from 4 percent to 4.4 percent since the start of the year. It is too early to tell if the housing recovery is slowing. If it is, some moderation in price gains could be seen later this year.”
The Commerce Department reported on Wednesday that New Home Sales surged 18.9 percent in September from August to their highest level since October 2007. This was the largest monthly gain since January 1992! Sales came in at 667,000 units versus the 555,000 units expected. Sales were up 17 percent year-over-year. Currently, there is a five-month inventory of houses on the market, down from six-months in August. A six-month supply is seen as a healthy balance between supply and demand.
CoreLogic reports that home prices nationwide rose 6.6 percent from May 2016 to May 2017 and 1.2 percent from April 2017 to May 2017. Tight inventories of homes for sale continue to push prices higher. CoreLogic forecasts indicate that home prices will increase by 5.3 percent on a year-over-year basis from May 2017 to May 2018.
Employers added 222,000 new jobs in June, well above expectations, the Labor Department reported. April was revised up from 174,000 to 207,000, and May was revised up from 138,000 to 152,000. With these revisions, employment gains in April and May combined were 47,000 more than previously reported. The unemployment rate was little changed at 4.4 percent. Employment growth has averaged 180,000 per month in 2017, in line with the average monthly gain of 187,000 in 2016. Average hourly earnings showed just a 0.2 percent gain from May and 2.5 percent gain year over year. May’s reading was revised lower to just 0.1 percent.
New Home Sales in December fell 10.4 percent from November to an annual rate of 536,000 versus the 589,000 expected. Higher mortgage rates and increasing home prices have been blamed. It was the lowest level since February 2015 and down 0.4 percent from December 2015. Within the report it showed that the median sales price rose nearly 8 percent from a year ago to $325,500. In addition, a near 6-month supply of new homes for sale finally shows a healthy balance between supply and demand
Existing Home Sales closed out 2016 as the best year in a decade, though December’s numbers were a bit below expectations. The National Association of REALTORS® reported that sales in 2016 were 5.45 million units, above the 5.25 million in 2015 and the highest since the 6.48 million in 2006. December Existing Home Sales declined 2.8 percent from November to an annual rate of 5.49 million units, which was below the 5.55 million expected. November was revised higher to 5.65 million from 5.61 million.