Economy Watch: New-Home Sales Down in February

According to the Census Bureau, new-home sales were down were down 1.6 percent in February. Despite high gas prices, Americans are driving more miles. And mass layoffs -- defined as 50 or more employees -- fell by 141 from January to February.

By Dees Stribling, Contributing Editor

Image courtesy Flickr user mel0808johnson

According to the U.S. Census Bureau on Friday, new-home sales were down 1.6 percent in February to an annualized rate of 313,000 units. The January total was an annualized 318,000, which represents a downward revision from 321,000 (though December and November have been revised upward). Compared with this time last year, new-home sales in February were up 11.4 percent for the month.

In February 2012, actual new-home sales (not seasonally adjusted) totaled 25,000, which also represents an uptick from February 2011’s total of 22,000 homes. Still, this February was the second-weakest February for new-home sales on record, with last year still holding the absolute lowball record. By contrast, 109,000 new homes were sold in February 2005, during the ascending side of the housing the bubble.

The supply of new houses increased from 5.7 months in January to 5.8 months in February. According to the bureau, the inventory includes houses for which “a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in non-permit areas, and a sales contract has not been signed nor a deposit accepted.” The current supply level is considered roughly normal, and is certainly a lot healthier than the all-time high of 12.1 months during the gloomy month of January 2009.

Americans Drove More Despite Gas Prices

The U.S. Department of Transportation reported on Friday that travel on all roads and streets edged up by 1.6 percent in January 2012 compared with the same month in 2011, despite the spike in the price of gasoline since then. Even small differences in the number of vehicle miles traveled add up quickly, since travel for January was estimated to be 224.8 billion vehicle miles (enough to go to Pluto and back 40 times, at Pluto’s closest approach to the Earth).

The 12-month average of U.S. vehicle miles, however, remains below its 2008 peak of just over 3 trillion miles (almost enough to go to the nearest star, to continue with the astronomical comparisons). The last time the price of gas spiked so violently was during the summer of 2008, which put a stop to decades of near-consistent annual increases in vehicle miles on American roads since the end of World War II, though during the oil shocks of the early 1970s there was a shorter-lived downturn in vehicle miles. Since the onset of the Great Recession, 12-month averages of miles driven have dropped for the most part, with some upticks.

During January 2011 gas averaged $3.06 per gallon, while in January 2012 the average was $3.33. As of March 25, the average was $3.89, according to AAA’s Daily Fuel Gauge Report. The highest-ever average was $4.11 on July 17, 2008, says AAA.

Mass Layoffs Drop

The Bureau of Labor Statistics said on Friday that employers took 1,293 mass layoff actions in February involving 119,463 workers (seasonally adjusted). For U.S. government purposes, a “mass layoff” involves 50 or more workers being shown the door at the same time by a single employer. Mass layoffs in February decreased by 141 from January, and the number of workers fired was down by 10,457.

In February, 282 manufacturing layoffs were reported, seasonally adjusted, resulting in 27,388 initial unemployment claims. Both the number of layoffs and the number of workers affected in the manufacturing sector were lower in February when compared to January.

Wall Street had a minor up day on Friday, with the Dow Jones Industrial Average gaining 34.59 points, or 0.27 percent. The S&P 500 advanced 0.31 percent and the Nasdaq eked out a 0.15 percent gain.