By Greg Heym, Brown Harris Stevens Chief Economist and host of Crossing The Line
Today, we have the latest on existing home sales, and tell you how 818,000 jobs can exist into thin air.
After Four Straight Declines Existing Home Sales Rose in July
Sales of previously owned homes rose 1.3% in July, their first increase since February.
This shouldn’t be much of a surprise for two reasons:
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Inventory has been rising sharply, and in July was 19.8% higher than a year ago.
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Mortgage rates have been drifting lower since May.
Before you get too happy, keep in mind that sales were still 2.5% lower than July 2023 and well below pre-pandemic numbers. Here are some other interesting findings of the report:
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All-cash offers comprised 27% of sales in July.
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29% of purchases were made by first-time buyers.
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Sales of homes priced at $1 million or more were 26.5% higher than a year ago.
In other positive real estate news, the average 30-year mortgage rate fell to 6.46% this week, its lowest level in 15 months. A year ago, rates were averaging 7.23%, so you can see the recent progress that’s been made in lowering rates.
818,000 Jobs Are Gone With the Wind
That’s not a reference to the movie, rather the Lynyrd Skynyrd song Tuesday’s gone. I saw Skynyrd on the night I wrote this, so it was already in my head. But I digress.
Each year, the Bureau of Labor Statistics revises its monthly employment counts—also referred to as benchmark revisions—using data from state unemployment tax records. This allows for a more complete report on job growth in the 12 months ending March of each year. Still with me?
For the period from April 2023-March 2024, the BLS found that 818,000 fewer jobs were created than originally reported. That’s amounts to a 0.5% downward adjustment, the biggest one made since 2009. According to the BLS website, these annual revisions have averaged plus or minus 0.1% the past 10 years, so this is a big adjustment.
This may sound scary, as it makes you wonder how much job growth since March may be revised downward when these revisions are made next year. Remember how concerned markets were when July job growth came in below estimates? If the past few months are revised significantly lower, that would mean the Fed is behind the curve and should have already started cutting rates.
Since some economists were predicting a downward revision of over 1 million jobs, this didn’t rattle markets as much as you would have expected. Therefore, I don’t expect this report by itself to cause the Fed to cut rates more than the 25 basis points markets expect next month. So, for now, just remember that there is still no reason to believe the economy is in recession, but the labor market is showing real signs of cooling.
