No Bad Sentiment in the Northeast

Nov 16, 2023

The past couple of weeks have seen some relief in mortgage rates and a rebound in weekly mortgage applications as a result, but that positive housing market development didn’t show per the latest reading on homebuilder sentiment.  The NAHB’s Housing Market Index dropped to 34 in November and is only three points above the low from last December.

In the table below, we show the readings of each sub-index of the report as well as the month-over-month change and how those readings stack up versus history.  As shown, the month-over-month declines across the report were historically large with the six-point drop in the headline index ranking in the bottom 2nd percentile of all monthly moves with each sub-index also experiencing bottom 5% moves.

Regional homebuilder sentiment was more peculiar. Again, there were historic declines in the Midwest, West, and South. The Northeast went in the complete opposite direction as sentiment rose by 7 points.  Although that does not leave sentiment at a new high, the month-over-month gain ranks in the 87th percentile of all months on record.

Continuing Claims Relentlessly Rise

Nov 16, 2023

Among a large slate of economic data released this morning, jobless claims disappointed with both initial and continuing claims coming in higher than expected.  For initial claims, the seasonally adjusted number rose meaningfully from an upwardly revised 218K last week to 231K.  That compares with expectations of a more modest increase to 222K.  That brings claims back to the highest level since the week of August 19th, and the 13K week over week rise was the largest since the first week of August.

On a non-seasonally adjusted basis, claims have continued their steady rise as is normal for this time of year.  At 215.9K, this week’s print was slightly higher than the comparable week last year, but also below those from the several years prior to the pandemic.  In other words, claims are deteriorating, but from what are still strong levels.

Continuing claims, on the other hand, keep looking worse every week. Continuing claims have now risen for eight straight weeks, bringing it up to 1.865 million. That surpassed a high from this past April to make for the most elevated reading since November 27, 2021.

As we have noted in recent weeks, the size of the move in continuing claims over the past couple of months has been comparable to the size of increases around prior recessions.  The same can be said for the consistency of upward moves in continuing claims.  As shown below, the eight straight weeks of higher readings is the largest since the spring of 2020.  Prior to that, most streaks of that size or longer occurred in the midst of a recession with the exception of the other two most recent instances in November 2018 and December 2019.