On a positive note, the Conference Board’s Leading Economic Index rose .6% in June, following increases in April and May. “The upward trend in the US LEI seems to be gaining more momentum with another large increase in June pointing to continued strength in the economic outlook for the remainder of the year. Housing permits and the interest rate spread drove the latest gain in the LEI, while labor market indicators such as average workweek and initial claims remained unchanged,” according to the Conference Board.
The number of Americans filing new applications for unemployment benefits fell last week to the lowest level in over 41 years. Initial jobless claims fell by 26,000 to 255,000 for the week ended July 18, marking the lowest level since November 1973.
Existing homes sold at the fastest pace in over eight years in June, increasing 3.2% to an annual rate of 5.49 million. A limited inventory of homes available for sale pushed the median sales price to a record high of $236,400. According to the National Association of Realtors, “Buyers have come back in force, leading to the strongest past two months in sales since early 2007. This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that’s giving more households the financial wherewithal and incentive to buy. June sales were also likely propelled by the spring’s initial phase of rising mortgage rates, which usually prods some prospective buyers to buy now rather than wait until later when borrowing costs could be higher.”
On a negative note, sales of new homes dropped 6.8% in June to an annual rate of 482,000, marking the slowest pace in seven months. At the current sales pace, the supply of new homes stands at 5.4 months.