THE HOUSING MARKET

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REUTERS

"U.S. homebuilding drops, construction backlog surges as shortages worsen"


By Lucia Mutikani

November 17, 2021

Summary

* Housing starts fall 0.7% in October

* Single-family starts drop 3.9%; multi-family up 6.8%

* Building permits rise 4.0%; single-family gain 2.7%


WASHINGTON, Nov 17 (Reuters) - U.S. single-family homebuilding tumbled in October while the number of houses authorized for construction but not yet started jumped to a 15-year high, underscoring the disruption to the housing market from an ongoing shortage of materials and labor.

Though the report from the Commerce Department on Wednesday showed an increase in permits for future homebuilding, the rise was concentrated in the volatile multi-family housing segment.

This will do little to alleviate an acute shortage of houses on the market, which has led to record annual gains in home prices.

"Residential housing construction activity continues to flounder," said Christopher Rupkey, chief economist at FWDBONDS in New York.

"There are zoning problems, higher land costs, a lack of labor, and inflation has inflated the cost of raw building materials."


Single-family housing starts, which account for the largest share of the housing market, dropped 3.9% to a seasonally adjusted annual rate of 1.039 million units last month.

The fourth-straight monthly decline pushed starts to the lowest level since August 2020.

Homebuilding fell in all four regions, with large decreases in the Northeast, Midwest and West.

The densely populated South, where the bulk of homebuilding occurs, reported a 1.8% drop in single-family starts.

Homebuilding has essentially been treading water this year as builders battle shortages and higher prices of raw materials.

A survey from the National Association of Home Builders on Tuesday showed confidence among single-family homebuilders rose for the third straight month in November, but noted that "supply-side challenges, including building material bottlenecks and lot and labor shortages, remain stubbornly persistent."

Lumber, which is used for framing, remains expensive and prices for copper, another essential material in homebuilding, are high.

In addition, there were about 333,000 job openings in the construction industry as of the end of September.

Some household appliances are in short supply.

Construction costs jumped a record 12.3% year-on-year in October, according to producer price data published last week.

The materials squeeze could ease during winter, a typically slow season for homebuilding in the Northeast and Midwest.

Slowing demand for houses because of reduced affordability could also help to lessen the pressure on supply.

Residential investment contracted for a second consecutive quarter in the third quarter.

It is likely to remain subdued in the final three months of the year.

"Supply-chain bottlenecks will likely limit construction activity in the short term, but the supply picture should look better in 2022," said Abbey Omodunbi, a senior economist at PNC Financial in Pittsburgh, Pennsylvania.

"Declining affordability and rising mortgage rates will soften demand in the next year."

Stocks on Wall Street were trading lower.

The dollar dipped against a basket of currencies.

U.S. Treasury prices were higher.

BUILDING PERMITS RISE

Starts for buildings with five units or more increased 6.8% to a rate of 470,000 units last month.

Workers returning to offices and schools reopening for in-person learning, thanks to COVID-19 vaccinations, are fueling demand for rental apartments.

With single-family homebuilding declining, overall housing starts slipped 0.7% to a rate of 1.520 million units in October.

Economists polled by Reuters had forecast starts rebounding to a rate of 1.576 million units.

Starts have declined from the 1.725 million unit-pace scaled in March, which was a more than 14-1/2-year high.

Still, homebuilding remains underpinned by a severe shortage of previously owned homes on the market, which has resulted in double-digit house price growth.

The backlog of single-family houses authorized for construction but not yet started jumped 4.8% to a rate of 152,000 last month, the highest since August 2006.

Permits for future homebuilding increased 4.0% to a rate of 1.650 million units in October.

Single-family permits rose 2.7% to a rate of 1.069 million units, leaving them just above starts.

Permits for buildings with five units or more surged 6.5% to a rate of 528,000 units.

Housing completions were unchanged at a rate of 1.242 million units.

Single-family home completions dropped 1.7% to rate of 929,000 units.

The stock of single-family housing under construction increased 1.4% to a rate of 726,000 units last month, the highest since May 2007.

Multi-family homes under construction rose to the highest level in more than 47 years.

Over time the housing backlogs and more inventory could help to bring more homes on to the market and cool the house price inflation, which has sidelined some first-time buyers.

A lot will, however, hinge on the supply of building materials and other inputs as well as labor.

"The recent slowdown in project completions has limited home sales in new communities," said Mark Vitner, a senior economist at Wells Fargo in Charlotte, North Carolina.

"That said, the growing backlog of projects should keep builders busy for the next couple of years."

Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

https://www.reuters.com/business/us-hou ... 021-11-17/
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Re: THE HOUSING MARKET

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REUTERS

"U.S. home sales climb to nine-month high; housing shortage persists"


By Lucia Mutikani

November 22, 2021

Summary

* Existing home sales increase 0.8% in October

* Median house price rises 13.1% year-on-year

* Housing supply drops 12% from year ago


WASHINGTON, Nov 22 (Reuters) - U.S. home sales unexpectedly rose in October, reaching their highest level in nine months, though higher prices amid tight supply continued to sideline first-time buyers from the market.

The report from the National Association of Realtors on Monday also showed an increase in the share of investors buying homes last month, likely reflecting growing demand for rental accommodation as the economy reverts to normal, thanks to vaccinations against COVID-19.


"Home sales remain resilient given the extremely tight supply of homes for sale," said Shannon Brobst, an economist at Moody's Analytics in West Chester, Pennsylvania.

"Potential home buyers will continue to find it challenging to find a home that meets their budget."

Existing home sales rose 0.8% to a seasonally adjusted annual rate of 6.34 million units last month.

The second straight monthly increase lifted sales to their highest level since January.

Economists polled by Reuters had forecast sales falling to a rate of 6.20 million units.

Sales rose in the most affordable Midwest region and the densely populated South, but fell in the Northeast and were unchanged in the West, which is the most expensive region.

Home resales, which account for the bulk of U.S. home sales, dropped 5.8% on a year-on-year basis.

The annual decline was, however, distorted by the surge in sales in October 2020.

Last month's sales pace was well above the 5.64 million units sold in 2020 and 5.34 million units in 2019.

First-time buyers accounted for 29% of sales, up from 28% in September and down from 32% a year ago.

Individual investors or second-home buyers made up 17% of transactions.

That compared to 13% in September and 14% a year ago.

Stocks on Wall Street were trading higher, with the S&P 500 and the Nasdaq hitting record highs after President Joe Biden picked Federal Reserve Chair Jerome Powell to lead the U.S. central bank for a second term.

The dollar rose against a basket of currencies.

U.S. Treasury prices fell.

EXPENSIVE HOMES

Sales soared over the summer of last year amid an exodus from cities to suburbs and other low-density locations as Americans sought more spacious accommodations for home offices and online schooling during the pandemic.

With vaccinations allowing workers to return to offices and schools to reopen for in-person learning, the pandemic tailwind has subsided.

Sales have declined from a peak 6.73 million unit-pace in October 2020, but demand for housing remains strong and continues to run against modest supply.

The median existing house price increased 13.1% from a year earlier to $353,900 in October.

Sales were concentrated in the $250,000-$500,000 price range.

"While competition for homes has eased somewhat since the mania months earlier this year, competition is still fierce and prices are still rising at double-digit rates," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.

"The problem is especially acute for lower-income buyers given prices and home availability are still skewed toward higher-priced homes."

There were 1.25 million previously owned homes on the market in October, down 12% from a year ago.

Last month, properties typically stayed on the market for 18 days.

That compared to 17 days in September and 21 days a year ago.

Eighty-two percent of homes sold in October were on the market for less than a month.

Government data last week showed a sharp decline in single-family homebuilding in October and the largest backlog of houses yet to be constructed in 15 years because of shortages of materials and labor.

That could boost housing inventory when the supply constraints ease.

At October's sales pace, it would take 2.4 months to exhaust the current inventory, down from 2.5 months a year ago.

A six-to-seven-month supply is viewed as a healthy balance between supply and demand.

Reporting by Lucia Mutikani; Editing by Dan Burns, Chizu Nomiyama and Andrea Ricci

https://www.reuters.com/markets/us/us-e ... 021-11-22/
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Re: THE HOUSING MARKET

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CNBC

"Home sales rose in October as investors rushed into the market"


Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK

PUBLISHED MON, NOV 22 2021

KEY POINTS

* Sales of previously owned homes in October rose 0.8% to a seasonally adjusted annualized rate of 6.34 million units, according to the National Association of Realtors.

* There were 1.25 million homes available for sale at the end of October, which is 12% lower compared with a year ago.

* The median price of an existing home was $353,900. That is 13.1% higher compared with October 2020.


Sales of previously owned homes in October rose 0.8% to a seasonally adjusted annualized rate of 6.34 million units, according to the National Association of Realtors.

Sales were 5.8% lower than October 2020.


October of last year was the cyclical high in the market.

This measure represents closed sales for existing single-family homes and condominiums in October, so contracts that were likely signed in August and September.

The closing process can take one to two months on average.

Realtors are now predicting full-year sales of over 6 million, which would be the highest number of sales since 2006.

“Sales remain very strong and I would attribute that to continuing job additions,” said Lawrence Yun, chief economist for the Realtors.

Yun also pointed to an increase in investors in the market, likely driven by soaring rents for single-family homes.

Investors made up 17% of October buyers, up from 13% in September and 14% in October of 2020.

All cash buyers represented 24% of buyers.

Most investors use all cash.


First-time buyers represented 29% of sales compared with 32% a year ago.

Historically that share is around 40%.

The supply of existing homes for sale continued to weaken.

There were 1.25 million homes available for sale at the end of October, which is 12% lower compared with a year ago.

This represents a 2.4-month supply at the current sales pace.

A 5 to 6-month supply is considered a balanced market between buyer and seller.

Weak supply and strong demand pushed the median price of an existing home to $353,900.

That is 13.1% higher compared with October 2020.

By price category, sales of homes priced under $250,000 fell 24% year over year.

Sales of homes priced between $750,000 and $1 million rose 25%.

Sales of million-dollar plus homes were up 31%.

Buyers in October did not get a break from mortgage rates.

They rose steadily from the start of August through September.

The average rate on the popular 30-year fixed loan was 2.78% on August 3rd, according to Mortgage News Daily.

By October 29th it was 3.22%.

The rate as of last Friday was 3.16%.

The latest read on sales of newly built homes from September showed a 14% jump from August.

Builders continue to see strong demand, due to the low supply of existing homes for sale.

Some of the largest national builders, however, have said they are slowing sales due to supply chain and labor issues.

They are concerned they might not be able to deliver the homes on time.

https://www.cnbc.com/2021/11/22/home-sa ... arket.html
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Re: THE HOUSING MARKET

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REUTERS

"U.S. new home sales rise in October, September revised down"


Reuters

November 24, 2021

WASHINGTON, Nov 24 (Reuters) - Sales of new U.S. single-family homes rose in October, but the sales pace for the prior month was revised sharply down as higher prices remain a hurdle for some first-time buyers.

New home sales increased 0.4% to a seasonally adjusted annual rate of 745,000 units last month, the Commerce Department said on Wednesday.

September's sales pace was revised down to 742,000 units from the previously reported 800,000 units.

Sales rose in the densely populated South, as well as in the Midwest, but fell in the West and Northeast.

Economists polled by Reuters had forecast new home sales, which account for more than 10% of U.S. home sales, unchanged at a rate of 800,000 units.

Sales fell 23.1% on a year-on-year basis in October.

They peaked at a rate of 993,000 units in January, which was the highest since the end of 2006.

Sales soared over the summer of last year amid an exodus from cities to suburbs and other low-density locations as Americans sought more spacious accommodations for home offices and online schooling during the pandemic.

With vaccinations allowing workers to return to offices and schools to reopen for in-person learning, the pandemic tailwind is fading.

Still, demand for new homes remains underpinned by an acute shortage of previously owned houses on the market.

The median new house price soared 17.5% in October to $407,700 from a year ago.

There were 389,000 new homes on the market, up from 378,000 units in September.

Houses under construction made up 62.2% of the inventory, with homes yet to be built accounting for about 28%.

Builders are being constrained by shortages of materials and labor.

The government reported last week that the backlog of houses yet to be constructed in October was the largest in 15 years.

At October's sales pace it would take 6.3 months to clear the supply of houses on the market, up from 6.1 months in September.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

https://www.reuters.com/markets/us/us-n ... 021-11-24/
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REUTERS

"U.S. consumer confidence perks up; economy poised for stronger 2021 finish"


By Lucia Mutikani

December 22, 2021

Summary

* Consumer confidence index increases in December

* Plans to buy homes, autos and major appliances rise

* Existing homes sales increase 1.9% in November

* Third-quarter GDP growth revised up to 2.3%


WASHINGTON, Dec 22 (Reuters) - U.S. consumer confidence improved further in December, suggesting the economy would continue to expand in 2022 despite a resurgence in COVID-19 infections and reduced fiscal stimulus.

The survey from the Conference Board on Wednesday showed more consumers planned to buy a house and big-ticket items such as motor vehicles and major household appliances as well as go on vacation over the next six months.

Inflation concerns eased a bit and households remained upbeat about the labor market.

This will likely help to underpin consumer spending even as government income to households is diminishing.

President Joe Biden's signature $1.75 trillion domestic investment bill known as Build Back Better (BBB), which aims to expand the social safety net and tackle climate change, suffered a blow on Sunday when moderate Democrat Senator Joe Manchin said he would not support it.

That prompted economists to slash their growth estimates for next year.

"Consumers are bullish on 2022," said Robert Frick, corporate economist with Navy Federal Credit Union in Vienna, Virginia.

"This is further evidence that consumer spending will keep rising and be the main factor fueling the expansion."

The Conference Board's consumer confidence index increased to a reading of 115.8 this month from an upwardly revised 111.9 in November.

Economists polled by Reuters had forecast the index rising to 110.8 from the previously reported reading of 109.5.

The cut-off date for the survey, which places more emphasis on the labor market, was Dec. 16.

Consumers' assessment of current business and labor market conditions was little changed, but their short-term outlook for income, business and labor market conditions was upbeat, which the Conference Board viewed as "setting the stage for continued growth in early 2022."

Consumers' inflation expectations over the next 12 months fell to 6.9% from a more than 13-year high of 7.3%.

Its so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, slipped to a still-high reading of 42.6 this month from 44.7.

This measure correlates to the unemployment rate from the Labor Department.

The share of consumers planning to buy a motor vehicle over the next six months increased.

Buying intentions for household appliances like washing machines, dryers and refrigerators also rose and more consumers were inclined to buy a house and go on vacation over the next six months.

The show of underlying strength as the nation confronts a winter wave of coronavirus infections, driven by the Delta and highly contagious Omicron variants is welcome news.

Surging infections could significantly curb growth in the first quarter.

Stocks on Wall Street were trading higher.

The dollar slipped against a basket of currencies.

U.S. Treasury prices were higher.

STRONG HOUSING DEMAND

The run of good news was extended by a second report from the National Association of Realtors showing existing home sales rose 1.9% to a seasonally adjusted annual rate of 6.46 million units in November.

But the housing market continues to be dogged by a severe shortage of homes for sale, which is keeping house prices elevated and squeezing first-time buyers out.

The median existing house price increased 13.9% from a year earlier to $353,900 in November.

First-time buyers accounted for 26% of sales last month, compared to 32% a year ago.

That was the smallest share since January 2014.


The reports added to October consumer spending data as well as a sharp narrowing of the trade deficit and steady rebuilding of inventories by businesses in suggesting the economy this year is on track to record its best performance since 1984.

A third report from the Commerce Department on Wednesday showed gross domestic product increased at a 2.3% annualized rate in the July-September quarter, revised up from the 2.1% rate estimated last month.

Growth last quarter was the slowest since the second quarter of 2020, when the economy suffered a historic contraction in the wake of stringent mandatory measures to contain the first wave of coronavirus cases.

The economy was restrained by a resurgence in coronavirus infections over summer, shortages of motor vehicles amid strained global supply chains as well as a decline in pandemic relief money from the government to businesses, households and state and local governments.

Growth was also hampered by Hurricane Ida, which devastated U.S. offshore energy production at the end of August.

"The recovery will end 2021 on a strong note, with strong household finances, rising employment, and an improved health backdrop, before Omicron arrived, supporting GDP growth above 7% in fourth quarter," said Oren Klachkin, lead U.S. economist at Oxford Economics in New York.

Fourteen out of 22 industries contributed to GDP growth in the third quarter.

Services industry output increased at a 3.9% rate, led by professional, scientific and technical services, finance and insurance, administrative and waste management, as well as accommodation and food services, and information.

That partly offset decreases in retail and wholesale trade.

Output in the goods-producing industries contracted at a 5.5% pace, reflecting a broad decline that was dominated by construction.

The government sector grew at a 5.1% rate, led by state and local governments.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

https://www.reuters.com/markets/us/us-t ... 021-12-22/
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Re: THE HOUSING MARKET

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REUTERS

"U.S. pending home sales drop in November; Omicron poses risk - NAR"


Reuters

December 29, 2021

Dec 29 (Reuters) - Contracts to buy U.S. previously owned homes fell unexpectedly in November as limited housing stock and lofty prices crimped activity, and the explosion of new coronavirus cases from the fast-spreading Omicron variant poses a risk to the housing market headed into 2022, a trade group said on Wednesday.

The National Association of Realtors (NAR) said its Pending Home Sales Index, based on signed contracts, fell 2.2% last month to 122.4.

Pending home sales were lower in all four regions.

Economists polled by Reuters had forecast contracts, which typically become final sales after a month or two, would rise 0.5% in November.

Pending home sales dropped 2.7% in November on a year-on-year basis.

Limited inventory has led to double-digit growth in home prices.

"There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices," said Lawrence Yun, NAR's chief economist.

"While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability."

Demand for housing shot up early in the coronavirus pandemic as Americans decamped from city centers to suburbs and other, less densely populated areas in a hunt for larger homes to accommodate online schooling and working from home.

The market cooled off in the first half of the year as limited inventory lifted prices beyond the reach of many would-be buyers.

Also the rollout of vaccines fueled optimism that people would be able to return to work in offices in urban areas and other business districts.

Activity has picked up again in recent months, however.

The combined annual sales rate of new and existing U.S. homes reached 7.2 million units in November, the highest since January.

Now, though, new variants of COVID-19 - first Delta and now Omicron - have swept across the country, forcing employers to retreat again on large-scale return-to-office plans.

The U.S. coronavirus caseload has shot to a record in the last week, according to a Reuters tally, surpassing the previous peak set early this year.

NAR's Yun said Omicron, the highly transmissible variant seen driving the latest surge in infections, poses a risk to the housing market's performance, as buyers and sellers are sidelined, and home construction is delayed.

Reporting by Dan Burns; Editing by Chizu Nomiyama

https://www.reuters.com/world/us/us-pen ... 021-12-29/
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REUTERS

"U.S. mortgage interest rates surge by most in almost 2 years"


By Reuters Staff

JANUARY 12, 2022

(Reuters) - The interest rate on the most popular type of U.S. home loan surged last week by the most in two years and has climbed back roughly to where it was before the coronavirus pandemic struck, after signals that the Federal Reserve would be raising rates sooner and faster than previously expected.

The Mortgage Bankers Association on Wednesday said its weekly measure of the average contract rate on a 30-year fixed-rate mortgage jumped to 3.52% in the week ended Jan. 7 from 3.33% a week earlier.

That was the largest weekly increase since March 2020 and pushed the prevailing rate to around where it was just before the pandemic triggered a recession and drove borrowing costs to historic lows when the Fed cut its benchmark rate to near zero.

That era now appears to have passed, however.

Mortgage rates had been edging higher for the past several months, but the large jump in rates last week followed the release of the minutes of the Fed’s December meeting.

That readout showed the policymakers were prepared to combat surging inflation with higher interest rates and a likely reduction in the Fed’s holdings of more than $8 trillion of Treasuries and mortgage-backed securities.

That is crimping mortgage application volumes, especially for loan refinancings, with rates now around half a percentage point higher than where they were three months ago.

“Rates at these levels are quickly closing the door on refinance opportunities for many borrowers."

"Although refinance activity changed little over the week, applications remained at their lowest level in over a month, and conventional refinance applications were at their lowest level since January 2020,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Overall loan application volumes rose 1.4% last week on the back of a 2.2% increase in loans to buy a home, while refinancing applications edged down by 0.1%.

Reporting By Dan Burns; Editing by Chizu Nomiyama

https://www.reuters.com/article/usa-eco ... SL1N2TS19P
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REUTERS

"U.S. home builder sentiment dips; New York state factory activity plummets"


By Lucia Mutikani

January 18, 2022

Summary

* Homebuilder sentiment slips in January

* New York state factory activity slumps


WASHINGTON, Jan 18 (Reuters) - Confidence among U.S. single-family homebuilders slipped in January after four straight monthly increases, and builders called for a new softwood lumber agreement with Canada to ease shortages and lower prices, a survey showed on Tuesday.

Other data showed factory activity in New York state slumped this month amid surging COVID-19 infections, but manufacturers remained upbeat about business conditions over the next six months.

The reports supported views that the economy started the year on a soft note because of high inflation, shortages and raging coronavirus cases, driven by the Omicron variant.

"This is a reminder that COVID still holds sway over the recovery," said Oren Klachkin, lead U.S. economist at Oxford Economics in New York.

"U.S. supply chain dynamics didn't improve at the end of 2021, and early data suggest they've only worsened in 2022."

The National Association of Home Builders/Wells Fargo Housing Market index dipped one point to 83 this month.

A reading above 50 indicates that more builders view conditions as good than poor.

"NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19% since December 2021," NAHB Chairman Chuck Fowke said in a statement.

"Policymakers need to take action to fix supply chains."


"Obtaining a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start."

According to the NAHB, higher material costs and shortages were adding weeks to typical single-family home construction times.

The economy is struggling with high inflation, mostly the result of the pandemic, which has snarled supply chains.

The United States last November nearly doubled the duties on imported Canadian softwood lumber to 17.9% after a review of its anti-dumping and countervailing duty orders.

The Trump administration initially imposed 20% duties on Canadian softwood lumber in 2018 after the collapse of talks on a new quota arrangement, but reduced the level in December 2020 to 9%.

President Joe Biden's administration had stuck to those duties until the Commerce Department's November review.

The NAHB survey was conducted during the first two weeks of January and does not fully reflect the recent jump in mortgage interest rates.

The 30-year fixed-rate mortgage averaged 3.45% during the week ending Jan. 13, up from 3.22% in the prior week, according to data from mortgage finance agency Freddie Mac.

More expensive building materials and higher mortgage rates could make housing less affordable, especially for lower-income groups and first-time home buyers.

The dollar was trading higher against a basket of currencies.

U.S. Treasury yields rose, weighing on Wall Street stocks.

THE OMICRON EFFECT

The NAHB survey's measure of current sales conditions was steady at 90, but its gauge of sales expectations over the next six months dropped two points to 83.

The component measuring traffic of prospective buyers also fell two points to 69.

A separate report from the New York Federal Reserve on Tuesday showed its "Empire State" index of current business conditions plunged 32.6 points to a reading of -0.7 this month.

This was the first negative reading since June 2020.

A reading below zero signals a contraction in the New York manufacturing sector.


New York has been slammed by a vicious winter wave of coronavirus infections which has severely disrupted business activity.

The survey offered an early read of Omicron's impact on the economy.

There are signs that infections have peaked in some regions, including New York.

"It is possible that the recent weakening is related to the surge in virus spread over the past several weeks and/or persisting supply issues and price pressures," said Daniel Silver, an economist at JPMorgan in New York.

"We will see if other January manufacturing surveys released this week and beyond reinforce the downbeat message from the Empire State survey."

Manufacturers reported a sharp decline in orders.

The survey's new orders index tumbled 32 points to a reading of -5.0.


There were also decreases in shipments and unfilled orders measures, though not of the same magnitude as the plunge in new orders.

Factories continued to wait long periods for supplies to be delivered, keeping prices elevated.

But manufacturers were generally optimistic about the outlook for the next six months.

The index for future business conditions dipped 1.3 points to a reading of 35.1 this month.

The capital expenditures index climbed two points to 39.7, a multi-year high, suggesting that firms plan significant increases in capital spending in the months ahead.

Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

https://www.reuters.com/business/us-hom ... 022-01-18/
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REUTERS

"U.S. weekly jobless claims at three-month high amid Omicron wave"


By Lucia Mutikani

January 20, 2022

Summary

* Weekly jobless claims increase 55,000 to 286,000

* Continuing claims jump 84,000 to 1.635 million

* Mid-Atlantic factory activity picks up in January

* Existing home sales drop 4.6% in December


WASHINGTON, Jan 20 (Reuters) - The number of Americans filing new claims for unemployment benefits jumped to a three-month high last week, likely as a winter wave of COVID-19 infections disrupted business activity, which could weigh on job growth in January.

The third straight weekly increase in jobless claims reported by the Labor Department on Thursday was also influenced by unfavorable seasonal factors after the holidays.

But coronavirus cases, driven by the Omicron variant, are subsiding and the seasonal factors, the model used by the government to iron out seasonal fluctuations in the data, are seen normalizing soon, suggesting the recent surge in applications is a blip.

"The Omicron variant of COVID-19 is hurting the U.S. labor market, but the good news is that this will be temporary," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

Initial claims for state unemployment benefits surged 55,000 to a seasonally adjusted 286,000 for the week ended Jan. 15, the highest level since mid-October.

The increase was the largest since last July.


Economists polled by Reuters had forecast 220,000 applications for the latest week.

Unadjusted claims fell 83,418 to 337,417 last week.

The decline was, however, less than the 138,773 decrease that had been anticipated by the seasonal factors.

Claims rose 6,075 in California, but plunged 14,011 in New York.

The United States is reporting an average of 752,698 new coronavirus infections a day, according to a Reuters analysis of official data.

The Census Bureau's Household Pulse Survey on Wednesday showed 8.8 million people reported not being at work because of coronavirus-related reasons between Dec. 29 and Jan. 10.

That was up from the 3 million from Dec. 1 to Dec. 13.

The bureau's Small Business Pulse Survey released on Thursday also showed an increase in establishments reporting large negative impacts from the pandemic.

It was led by accommodation and food services businesses, with big rises also in education as well as arts entertainment and recreation.

The labor market setback is unlikely to stop the Federal Reserve from raising interest rates in March to tackle high inflation.

Claims have plunged from a record high of 6.149 million in early April 2020.

Employers are desperate for workers, with 10.6 million job openings at the end of November.

The unemployment rate is at a 22-month low of 3.9%, a sign the labor market is at or close to maximum employment.

"The underlying strength in the labor market suggests this is a temporary blip due to Omicron," said John Lynch, chief investment officer at Comerica Wealth Management in Charlotte, North Carolina.

"We look for job growth to continue to firm as global cyclical recovery persists."

Stocks on Wall Street were higher.

The dollar rose against a basket of currencies.

U.S. Treasury yields fell.

BAD OMEN?

But some economists worried that the jump in claims, which followed a plunge in retail sales in December as well as manufacturing production, could be signaling a faster slowdown in economic activity than currently anticipated.

"The higher layoffs are a cautionary tale for the economy where despite inflation pressures, the Fed will have to proceed with their interest rate hikes at a measured pace," said Christopher Rupkey, chief economist at FWDBONDS in New York.

"The economy may be slowing down more than previously believed."


Manufacturing, however, appears to be picking up, though shortages and higher prices remain a headache.

The Philadelphia Fed said on Thursday its business activity index rose to a reading of 23.2 in January from 15.4 in December.

Any reading above zero indicates expansion in the region's manufacturing sector, which covers eastern Pennsylvania, southern New Jersey and Delaware.

News on the housing market was discouraging.

A fourth report from the National Association of Realtors showed existing home sales dropped 4.6% to a seasonally adjusted annual rate of 6.18 million units in December as higher prices amid record low inventory continued to shut out some first-time buyers.


Economists expect demand for housing to remain strong even as mortgage rates increase.

"Unless job and income growth slow sharply, owner-occupied housing demand is likely to remain solid, keeping upward pressure on house prices," said David Berson, chief economist at Nationwide in Columbus, Ohio.

Worker shortages are boosting wages, and households are sitting on savings accumulated during the pandemic.

The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of January's employment report.

Last week's jump in claims together with the rise in businesses negatively impacted by COVID-19 and persistent labor shortages raise the risk of a drop in payrolls this month.

The economy added 199,000 jobs in December, the fewest in a year.

The workforce is about 2.2 million smaller than before the pandemic.

The recent softening in the labor market trend was also highlighted by the claims report, which showed the number of people receiving benefits after an initial week of aid increased by 84,000 to 1.635 million in the week ended Jan. 8.

"The pandemic continues to displace workers from the labor force," said Van Hesser, chief strategist at Kroll Bond Rating Agency in New York.

"We need the labor force to grow to sustain healthy economic growth."

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Andrea Ricci and Leslie Adler

https://www.reuters.com/world/us/us-wee ... 022-01-20/
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Re: THE HOUSING MARKET

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REUTERS

"U.S. mortgage rates jump to two-year high, further squeezing buyers"


By Jonnelle Marte

February 10, 2022

Feb 10 (Reuters) - U.S. mortgage rates increased to a two-year high last week and could keep rising, a trend which may further squeeze first-time buyers struggling to overcome higher home prices and limited housing supply.

Rates for a 30-year fixed-rate mortgage averaged 3.69% for the week ending Feb. 10, up from 3.55% the previous week, according to a report released on Thursday by Freddie Mac.

Mortgage rates are now the highest they've been since January 2020, shortly before the start of the pandemic.

"The normalization of the economy continues as mortgage rates jumped to the highest level since the emergence of the pandemic," Sam Khater, chief economist for Freddie Mac, said in a statement.

Mortgage rates are likely to continue rising in the coming months as the Federal Reserve raises interest rates to combat higher inflation.

Investors increasingly expect the Fed to raise rates by half a percentage point next month after data released Thursday showed that annual inflation increased in January by the most in 40 years.

The higher borrowing costs could weigh on would-be home buyers feeling pessimistic about the housing market.

The share of people who say it is a good time to buy a home fell to 25% in January, a survey record-low, according to a survey released on Monday by Fannie Mae.

Home prices continued to rise in the fourth quarter of 2021, but at a slower pace.

The median price of a single-family home increased by 14.6% from the previous year, compared with an increase of 15.9% in the third quarter, according to a report released Thursday by the National Association of Realtors.

"The escalating prices took a toll on home shoppers," Lawrence Yun, chief economist for the NAR, said in a statement.

"A number of families, especially would-be first-time buyers, are increasingly being forced out of the market."

Reporting by Jonnelle Marte; Editing by Leslie Adler

https://www.reuters.com/world/us/us-mor ... 022-02-10/
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