It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines…
Existing Home Sales
On Wednesday, the National Association of Realtors (NAR) reported that existing home sales in January declined 3.2% month-over-month. Economists were looking for home sales to rise 0.9% to a rate of 5.60 million units in January. Instead, we saw the second-straight month of a decrease in sales. On an annual basis, existing home sales, which account for almost 90% of U.S. home sales, dropped 4.8%. This represents the steepest year-over-year decline in over three years.
Median existing home prices for all housing types rose 5.8% year-over-year to $240,500, up from $227,300 in January 2017. This is the 71st-straight month of year-over-year price increases.
Overall, we continue to see strong demand and weak supply, as well as a shortage of affordable housing. However, as I mentioned in last week’s blog, housing starts and building permits have improved dramatically, and this should bode well for a boost in supply.
And finally, market observers still think that 2018 could be the turning point for increased existing home sales to first-time homebuyers, namely because of rising wages and the new corporate tax reform plan spurring economic growth.
Index of Leading Economic Indicators
On Thursday, the Leading Economic Indicators (LEI) report rose for the third consecutive month, climbing 1.0% in January to 108.0, exceeding economists’ expectations for a 0.7% increase. As a reminder, this report is a good predictor of patterns in the economy. This is because the ten key metrics it measures includes stock prices, unemployment insurance claims and building permits.
In the end, the growth of this index is an encouraging sign of continued growth in the U.S. economy for the first half of 2018. Now, effects from the recent stock market correction won’t show up until the next report, scheduled for release on March 22. However, I don’t expect next month’s results to be significantly impacted by the market correction.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings out of Portfolio Grader.
Until next week,