Economy Watch: U.S. Existing Home Sales, Manufacturing Production Levels

The National Association of Realtors reports that home sales are at the highest level for 2014, while the Markit Flash U.S. Manufacturing Purchasing Manager's Index shows an unexpected rise for July.

The National Association of Realtors reported on Thursday that total U.S. existing home sales rose 2.4 percent month-over-month in July, to an annualized rate of 5.15 million units, the highest level so far in 2014, but still 4.3 percent below July 2013. In June 2014, the rate was an annualized 5.03 million units; in July 2013, the rate was 5.38 million units.

Total housing inventory at the end of July rose 3.5 percent to 2.37 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. Unsold inventory is 5.8 percent higher than a year ago, when there were 2.24 million existing homes available for sale.

According to NAR, the median existing-home price for all U.S. housing types in July was $222,900, a 4.9 percent gain from July 2013. This marks the 29th consecutive month of year-over-year price gains, and affordability might be an issue going forward. The organization’s chief economist, Lawrence Yun, warned in a statement that “median family incomes are still lagging behind price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy.”

Manufacturing Sector Strengths

The Markit Flash U.S. Manufacturing Purchasing Managers’ Index, which tracks business conditions in the manufacturing sector, came in at 58.0 in August, according to Markit Economics Ltd. on Thursday. That’s a considerable and unexpected rise from July, when the index was 55.8. All five components of the index were positive, putting the index at its highest level in more than four years (50 and above mean improving business conditions; below 50 means deterioration.

The August report pointed to a steep rise in production levels across the manufacturing sector. Survey respondents cited the improvement in the U.S. economy as one reason for the good news. A rise in orders from overseas was another factor.

For the week ending August 16, initial unemployment claims were 298,000, a decrease of 14,000 from the previous week, according to the U.S. Department of Labor on Thursday. The four-week moving average was 300,750, an increase of 4,750 from the previous week’s revised average.

Wall Street bounced upward again on Thursday, ahead of the meeting of central bankers in Wyoming – with the Dow Jones Industrial Average gaining 60.36 points, or 0.36 percent, putting it above 17,000 again. The S&P 500 and the Nasdaq were up 0.29 percent and 0.12 percent, respectively.