Indicators show recovery, with housing leading the way

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The housing market continues to be the poster child for the economic recovery, with August numbers showing a third straight month of gains, with sales at the highest pace in nearly 14 years.

Existing-home sales rose 2.4% in August to a seasonally adjusted 6.00 million pace, up from a 5.86 million level in July, the highest level since December 2006, the National Association of Realtors reported Tuesday.

Economists polled by IFR Markets expected a rate of 6.00 million.

Year-over-year sales jumped 10.5%.

“The August increase in existing-home sales was further confirmation of the housing market’s V-shaped recovery and overall strength in demand,” according to Joel Kan, assistant vice president of economic and industry forecasting at the Mortgage Bankers Association. “The annualized pace of sales hit the 6-million mark for the first time since 2006, as transactions delayed by the pandemic continued to catch up.”


"Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market," NAR Chief Economist Lawrence Yun said. "Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery."

MBA's Kan noted, “August was the second consecutive month of strong year-over-year sales gains, which is noteworthy considering the declines from April through June, and sales being down 31% in May.”

Despite the positives,, the market is not worry-free. “It is concerning that housing inventory continued to decline last month and was over 18% lower than in 2019,” Kan said. “This lack of supply continues to push home-price growth higher. The 11% gain in prices is far above income growth and threatens overall affordability — especially for first-time buyers. Homebuilders continue to face constraints, including higher production costs. However, it’s clear that more inventory is needed to keep home prices from rising too quickly.”

Philadelphia Fed non-manufacturing survey
The Philadelphia region's services sector showed “continued signs of improvement” in September, as the general business conditions index climbed to 8.0 from 1.6 in August, while at the firm level, the index climbed to 20.4 in September from 17.9 the prior month, according to the Federal Reserve Bank of Philadelphia.

The prices paid index was 17.1, up from 10.1 last month, while prices received reversed to positive 15.5 from negative 6.3.

New orders index slipped to 8.5 from 11.6, sales or revenues declined to 9.8 from 10.7, the unfilled orders index dropped to 1.0 from 4.5, the inventories index climbed to positive 0.4 from negative 2.3, the number of full time employees index gained to positive 5.1 from negative 3.0, and the average employee workweek fell to 9.7 from 13.2.

The six months from now regional general business conditions index increased to 33.7 from 19.7, while at the company level, the general business conditions index rose to 52.1 from 35.0.

Richmond Fed surveys
Service sector activity “improved slightly” in September according to the Federal Reserve Bank of Richmond service sector survey, released Tuesday.

The current revenues index increased to 6 from 2 and the demand index rose to positive 11 from negative 1.

The local business conditions index also climbed, to positive 7 from negative 3, the services expenditures index narrowed to negative 7 from negative 14, capital expenditures rose to positive 1 to negative 13, while the number of employees index declined to negative 3 from zero.

The expected service sector revenues index increased to 21 from 3, services expenditures reversed to positive 9 from negative 18, capital expenditures climbed to positive 11 from negative 6, while the number of employees index gained to 9 from 4, the wages index rose to 24 from 16, and the demand index jumped to 21 from 7.

The current prices paid trends index rose to 5.50 from 5.08, while the prices received index grew to 3.55 from 2.39.

The expected price paid trends index increased to 3.98 in September from 2.83 in August, while the prices received index gained to 2.50 from 1.59.

Manufacturing activity in the district “improved” in the month, the Richmond Fed said, as the manufacturing index gained to 21 from 18 last month.

Shipments dipped to 13 from 22, volume of new orders rose to 27 from 15, local business conditions gained to 24 from 19 and capital expenditures climbed to 20 from 4.

Looking six months ahead, the future shipments index rose to 51 from 33, volume of new orders increased to 45 from 25, local business soared to 52 from 23 and capital expenditures index rose to 35 from 19.

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Economic indicators Housing market Federal Reserve Bank of Philadelphia Federal Reserve Bank of Richmond Manufacturing industry
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