Kritika Jain

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The latest UK housing market data from the Royal Institute of Chartered Surveyors (RICS) residential market survey and from the latest Halifax House Price Index revealed surprising signs of improvement. 

The key messages from these reports were as follows-

•	The RICS measure for new buyer enquiries in May climbed to -18%, a significant improvement compared to the previous reading of -34% in April. However, despite a noteworthy turnaround in buyer interest over the past 12 months, the figure still suggests a relatively subdued trend in buyer demand.

•	Alongside this, the agreed sales balance rose to -7% in May, also much less negative from figures of -29% and -18% recorded in March and April respectively.

•	The national house price balance additional remained in negative territory but still rose to -30% in May, up from –38% in April. This was firmer than expected as the consensus forecast was centred on a net balance of -38%.

•	This news chimed with yesterday’s survey of house prices from the Halifax building society. The headline house price index, for example, showed no growth in May, following a decline of 0.4% in April.

•	Still, the weaker house price trend in recent months meant that UK house prices experienced their first year-on-year contraction since 2012 with a -1.0% fall in the annual rate of growth in May.


United Kingdom

UK Housing Market Improves Amidst Rising Interest Rates

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Sandy Batten

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Sales of existing homes rebounded in October, increasing 3.4% m/m (+2.9% y/y) to 3.96 million (SAAR) after having fallen in both August and September. This was the first positive annual gain since July 2021. The effective 30-year mortgage interest rate continues to rise, increasing 60 basis points during October. The Action Economics Forecast Survey expected October sales of 3.90 million units. The sales figures are based on closings of sales signed over the past couple of months.

The median price of all existing homes (NSA) edged up 0.1% m/m (4.0% y/y) in October to $407,200 from an upwardly revised $406,700 (previously $404,500) in September. This was the first monthly gain in the past four months. The median price of an existing single-family home increased 0.2% m/m (4.1% y/y) to $412,200 in October from $411,400 in September (revised up from $409,000). The median price of condos and co-ops fell 0.6% m/m (+1.6% y/y) to $360,300 in October from $362,500 in September (revised up from $361,600).

Sales of existing homes rose in October in each of the four major regions. Sales in the Northeast increased 2.2% m/m (unchanged y/y), the first monthly gain in three months, to 470,000. Sales in the Midwest jumped 6.7% m/m (1.1% y/y), the largest monthly gain since February, to 950,000. Sales in the South gained 2.9 m/m (2.3% y/y) to 1.77 million after monthly declines in both August and September. Sales in the West increased 1.3% m/m (8.5% y/y) to 770,000.

The number of existing homes for sale (NSA) rose 0.7% m/m (19.1% y/y) to 1.37 million last month, offsetting a 0.7% decline in September. The supply of homes on the market at the current selling rate (NSA) inched down to 4.2 months from 4.3 months in September. This figure has generally risen since February. The record low in supply of 1.6 months was reached in January 2022. These figures date back to January 1999.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.



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- Sales rose 3.4% m/m after declining in each of the previous two months.
- Year-ago sales increased 2.9%, the first positive annual reading since July 2021.
- Monthly sales rose in all four major regions.
- The median price increased 4.0% from a year ago.


U.S. Existing Homes Sales Rebounded in October

Tom Moeller

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The Conference Board's Leading Economic Index fell 0.4% (-4.1% y/y) during October, following two months of 0.3% weakening. A 0.3% decline in the October index had been expected in the Action Economics Forecast Survey. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity.

Component increases in the leading indicators index which contributed positively to the index change included improved factory orders for consumer goods, higher stock prices in the S&P 500 index and the leading credit index. Series contributing negatively were the factory sector workweek, higher unemployment insurance claims, the ISM new orders index, building permits, the interest rate yield curve and consumer expectations for business/economic conditions. Holding steady was new orders for nondefense capital goods.

The Coincident Economic Index was unchanged last month (1.3% y/y) after holding steady in September. Movement amongst the four components was mixed in October. Industrial production fell, but real personal income and real manufacturing & trade sales rose. Payroll employment held steady.

The Lagging Economic Index eased 0.1% last month (+0.4% y/y) after rising 0.3% in September. The duration of unemployment, the six-month change in factory unit labor costs, the prime rate charged by banks and C&I loans outstanding contributed negatively to the index change. The 6-month change in the services CPI and the ratio of consumer installment credit-to-personal income contributed positively. The business inventory-to-sales ratio contributed zero to the index change.

The ratio of coincident-to-lagging indicators, considered another leading indicator, rose slightly last month following three straight months of increase.

The Conference Board figures are available in Haver's **BCI** database; the components are available there, and most are also in **USECON**. The expectations are in the **AS1REPNA** database. Visit the Conference Board's [website](https://www.conference-board.org/us) for coverage of leading indicator series from around the world.


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- Component movement in leading index is mixed.
- Coincident indicators hold steady again.
- Lagging indicators are little changed.


U.S. Leading Indicators Continue to Decline in October

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The Current General Activity Diffusion Index declined to -5.5 during November after improving to 10.3 in October, according to the Manufacturing Business Outlook Survey (MBOS) from the Federal Reserve Bank of Philadelphia, indicating deterioration in factory sector activity this month. A reading of 6.4 had been expected in the Action Economics Forecast Survey. Eighteen percent of the firms reported increases in general activity in November while 23.1% reported decreases. Responses to this month's survey were collected between November 11 and November 18.

Haver Analytics calculates an ISM-adjusted current activity diffusion index from five key components using the methodology along the lines of the national ISM index. The index declined to 49.2 In November and reversed all of its October improvement to 52.7.

The new orders index fell to 8.9 this month after rising to 14.2 in October, while the shipments series declined to 4.5 after rising to 7.4. The unfilled orders index rose to 6.8 after improving to -1.5 and the delivery times reading weakened to -2.1 after rising to 10.2 in October. The inventories index increased to 5.4 after falling to 0.5 last month.

The number of employees’ index increased to 8.6 in November after falling to -2.2 in October, suggesting an overall increase in employment. Seventeen percent of respondents reported increases in employment in November while 8.5% reported declines. The average employee workweek index surged to 17.4, its highest level since April 2022, from -11.8 in October.

Inflation indicators weakened this month. The prices paid index declined to 26.6 in November after falling to 29.7 last month. The index had risen in September to the highest level since December 2022. A lessened 26.6% of respondents reported increases in input prices in November while none reported decreases. The prices received index declined to 14.3 after falling to 17.9 in October. A lessened 15.4% of respondents reported increases in prices while a decreased 1.1% reported declines.

The future activity index surged to 56.6 during November after rising	to 36.7 in October. The reading was 15.8 in September. Most of the components rose, notably new orders and employment. Shipments and unfilled orders increased moderately to new highs. The prices paid series jumped to the highest level since April 2022 while prices received also strengthened. The expected capital spending measure rose slightly and was near its highest level in two and one-half years.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The series from the survey dating back to May 1968 can be found in Haver's **SURVEYS** database. The expectations forecast figures are from the Action Economics Forecast Survey in **AS1REPNA**.


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- Current General Activity Index retraces two months’ improvement.
- New orders & shipments ease, but employment strengthens.
- Inflation indicators fall sharply.


U.S. Philadelphia Fed Manufacturing Index Weakens in November

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance were down 6,000 to 213,000 seasonally adjusted in the week ended November 16, from 219,000 in the week ended November 9. The previous week’s level was revised up 2,000 from 217,000. The Action Economics Forecast Survey expected the latest week to be 222,000. The 4-week moving average of actual claims was 217,750 down from 221,500 in the week ended November 9.

The total number of unemployment insurance beneficiaries, also known as “continuing claims,” was 1.908 million seasonally adjusted in the week ended November 9, up 36,000 from 1.872 million in the week ended November 2, revised down marginally from 1.873 million. This is the highest level for insured unemployment since November 13, 2021 when it was 1.974 million. The 4-week moving average of continuing claims was 1.879 million in the November 9 week, up from the prior week’s 1.874 million. This is the highest level for this average since November 27, 2021 when it was 1.928 million.

Through the week ended November 9, the number of beneficiaries as a percent of covered employment was 1.3%, up from 1.2%, and the first rise since March 11, 2023.

Economic conditions vary widely across states and territories. In the week ended November 2, the highest unemployment rates were in New Jersey (2.18%), California (1.98%), Puerto Rico (1.89%), Washington (1.71%) and Alaska (1.62%). The lowest rates were in South Dakota (0.29%), Florida (0.37%), Virginia (0.40%), Alabama and Kentucky (both 0.42%), and New Hampshire (0.45%). Rates in other notable states include New York (1.51%), Illinois (1.44%), Pennsylvania (1.38%) and Texas (1.00%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.



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- Jobless claims on very slight downward trend.
- Continuing claims are rising gradually.
- The insured unemployment rate inched up to 1.3%, the first rise since March 2023.
