Falling jobless claims, existing home sales offer mixed economic picture

REAL ECONOMY BLOG | September 21, 2023

Authored by RSM US LLP

Even as the labor market remains tight, signs of a slowdown continue to appear in different pockets of the economy. The mixed signals from Thursday’s data on initial jobless claims and existing home sales added to an economic picture that resembles a soft landing when the economy bends but does not break.

Initial claims for jobless benefits last week fell to 201,000, the lowest level since January, according to Labor Department data. That was below the pre-pandemic average of 218,000.

Last week’s claims data—ending Sept. 15—was the last payroll period included in the September jobs report that will be released on Oct. 6, suggesting another strong month of job gains.

But looking ahead, it is more likely that such a low level of layoffs won’t last for too long given the impact of the auto worker strike, wildfires in Hawaii and a potential government shutdown. There are also a number of high-profile layoffs that should show up in the data in the coming weeks.

That being said, as long as new claims remain under 250,000 on average, the economy should continue to cruise toward its soft landing, fueled by a rock-solid labor market.

Existing home sales

In a separate report released by the National Association of Realtors on Thursday, the housing market showed further strain with August sales of existing homes dropping by 0.7%. The decline marked the fifth drop in six months for existing home sales as mortgage rates have surged to a multidecade high.

The impact of high mortgage rates also showed up through the 4.8% increase in condominium and co-op sales, a more affordable segment for buyers than single-family homes, which fell by 1.4%. Sales of condominiums and co-ops have been relatively stable since May.

The supply of existing homes was unchanged at 3.3 months. While that was low compared to a range of four to five months of supply before the pandemic, the 3.3 month figure is still below the levels of 2021, when the supply fell below two months. Listings stayed 20 days on the market before getting sold, higher than a year ago when it was only 16 days.