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Weekly Update 12/27/2024: On Track for Solid Year

Insights
  • New home sales rebound
  • Initial jobless claims fall
  • Solid holiday shopping

New home sales

The Census Bureau reported on Monday that new home sales in November rose 5.9% to a 664,000 annualized rate. That was a little below but still close to in line with the median estimate of 669,000 in a survey of economists by Bloomberg. Sales in the South rose 14% while sales in the Northeast and West declined. The median sales price of a new single-family home fell 6.3% in November versus a year ago to $402,600. The decline was thanks in part to the supply of homes for sale increasing to the highest since the end of 2007. Contractors are also helping spur sales by offering mortgage buydowns and/or cutting prices. New home sales are seen as a timelier measure of the housing market than previously owned homes, which are calculated when the contract closes.

Initial jobless claims

The Labor Department reported yesterday that initial jobless claims fell to 219,000 in the week ended December 21. Meanwhile, continuing claims, which measures the number of individuals still receiving benefits, rose to 1.91 million in the week ended December 14. That figure was the highest in more than three years and suggests that though the economy remain overall healthy, there may be cracks beneath the surface. In the opinion of Bloomberg economist Eliza Winger: “The low level of initial jobless claims this year reflects the low take-up rate of unemployment benefits — due to ineligibility for some persons, and a lack of incentives to apply among those who are eligible. The surge of continuing jobless claims, with laid-off workers facing longer stretches of unemployment, shows the labor market slowing.” Though initial jobless claims were below last week’s 220,000 and the consensus view of 223,000, the four-week moving average rose to 226,500. Point estimates are always difficult around the holiday season with an influx of temporary workers, but recent data has shown that the trend has turned weaker. The median duration of unemployment reached 10.5 weeks in November, up from nine a year earlier.

Retail sales

According to Mastercard SpendingPulse, spending for the period November 1 through December 24 rose 3.8% this year compared to the same period last year excluding automobile sales. In 2023, for that same period, spending rose 3.1% compared to 2022. Online shopping rose 6.7% this year while in-store spending also increased, but only by 2.9%. The last five days of the holiday season accounted for 10% of all holiday spending, suggesting that consumers were holding out for discounts. Given that Thanksgiving was one week later in the calendar than last year, resulting in Black Friday delayed by seven days, the level of spending can be considered solid. Restaurant spending remained strong, up 6.3%, while apparel sales rose an impressive 3.6% when compared to last year’s 2.4% rise. Electronics and jewelry were two groups which saw sales gains this year of 3.7% and 4%, respectively, compared to last year which featured declines for both categories. "The holiday shopping season revealed a consumer who is willing and able to spend but driven by a search for value as can be seen by concentrated e-commerce spending during the biggest promotional periods," said Michelle Meyer, chief economist at the Mastercard Economics Institute. "Solid spending during this holiday season underscores the strength we observed from the consumer all year, supported by the healthy labor market and household wealth gains." The crosscurrents of a solid holiday spending season versus a weakening job market will be top of mind for investors in 2025.

Company Events

SGK writes additional weekly commentary for clients of the firm detailing recent events and earnings of core equity holdings.

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