Home Sales Drop for Third Month Amid Rising Rates

What Thursday’s Economic Reports Tell Us

Realtor visiting senior couple at home.
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Fewer homes sold in the U.S. in April—the third straight monthly decline—while a weekly measure of unemployment rose to the highest level since January, reports showed Thursday.

Here’s a quick look at the most significant economic indicators of the day and what they tell us.

Existing Home Sales 

  • The pace of home sales fell for the third month in a row. Expressed as an annualized rate, 5.61 million existing homes sold in April, 2.4% fewer than in March and the least for any month since June 2020, according to the National Association of Realtors. In turn, the number of unsold homes reached 1.03 million, giving some breathing room to a frenetic market that hadn’t had more than 1 million homes for sale at any one time since November. (For perspective, 2 or 3 million has not been uncommon in past decades.)
  • A recent spike in mortgage rates has exacerbated record-setting price increases to noticeably dampen interest in homebuying. While that’s not great news for sellers or the real estate industry, it may accomplish what the Federal Reserve hoped it would–reduce demand and encourage prices to come down. Economists forecast a continued slowdown in home sales. 

Initial Jobless Claims 

  • Last week 218,000 people initiated claims for unemployment benefits, 21,000 more than the previous week, according to the Department of Labor. While that’s the most for any week since late January—and slightly higher than the 200,000 economists expected—it’s still within the range that was typical before the pandemic triggered millions of job losses.
  • With the number of job openings in the U.S. at a record high, the labor market continues to favor workers over employers. While several high-profile technology companies including Netflix and Carvana have reportedly begun laying people off, economists said they don’t expect widespread layoffs. 
  • “People are quitting their jobs at a prodigious rate, knowing they will easily find another job,” Ryan Sweet, an economist at Moody’s Analytics, wrote in a commentary. “Confidence is a fickle thing and can quickly evaporate, but there is no indication of that happening any time soon.” 

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Sources
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  1. National Association of Realtors. “Existing-Home Sales Retract 2.4% in April.”

  2. National Association of Realtors. “Existing Home Sales.”

  3. Department of Labor. “News Release.”

  4. Moody’s Analytics. “Jobless Claims.”

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