WHAT ARE WEAK HOME SALES SAYING ABOUT THE ECONOMY?

(I have a hiatus in my posting because I got caught in a scam and have to spend a lot of time getting new credit cards and changing passwords.  I'm still working on it, but have the most important things done.  Fortunately my credit card company involved recognized the charge as phony and refused to accept the charge.  The scammers wanted me to call them and tell them the charge is all right, but I said I'm not calling anyone and cancel the order.  It started with a message supposedly from my security company ( professional looking job), but the phone number was to someone else unbeknownst t me.).


I continue to think that home sales reflect on the economy.*
Home sales usually are directly tied to an economy's health and rise and fall with economic activity. As economies slow, the supply of money tends to become more restrictive. As money becomes harder to borrow, fewer home buyers enter the housing market. With restrictive lending requirements making fewer buyers available, inventories of homes go up or take longer to sell. A greater supply of a product coupled with lower demand for it generally forces prices downward.*

The market for homes continues to lag** even after the huge tax cut.  I guess this is a reflection that the tax cut was mainly for the wealthy.

House hunters signed 2.2 percent fewer contracts to buy existing homes in December, according to the National Association of Realtors.

These so-called pending sales are a future indicator of closings in one to two months. The Realtors' pending home sales index was also down a dramatic 9.8 percent compared with December 2017.

This marks 12 straight months of annual declines. It is also the lowest December sales reading since 2013.**

So if home sales lag, it shouldn't be a good sign for the economy.  At the same time, unemployment application have fallen markedly, even with the partially closed government.***

Initial claims for state unemployment benefits dropped 13,000 to a seasonally adjusted 199,000 for the week ended Jan. 19, the lowest level since mid-November in 1969 when 197,000 applications were recorded, the Labor Department said on Thursday. Data for the prior week was revised lower to show 1,000 fewer applications received than previously reported.***

Sales of homes is not the only thing in the pits economically:****
Daniel Richard stands in a 250-acre field, surveying the ruins of his hard work: Rotting soybeans as far as the eye can see.
............................................................
This is just one field Richard had to leave unharvested. In total, about 800 acres, 40 percent of his crop, sit dried out and useless.

“We lost the demand in the market with the tariffs. There were no exports. They weren’t shipping out. China wasn’t buying, of course China buys about, a little over 50 percent of our crop.”****

Also, the price of copper is down.  copper is considered to be a good indicator.  Employment in manufacturing is also down.
Today’s manufacturing output is at least 5 percent greater than it was in 2000, but it has become much more capital intensive and much less labor intensive. Accordingly, workers in the sector are more likely to have at least some college education than their counterparts of years past. But there are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980. These job losses have likely contributed to the declining labor force participation rate of prime age (between the ages of 21 and 55) U.S. workers. In “The transformation of manufacturing and the decline of U.S. employment,” (National Bureau of Economic Research, Working Paper 24468, March 2018), economists Kerwin Kofi Charles, Erik Hurst, and Mariel Schwartz examine the factors that have played a role in the decline of prime age manufacturing workers since 1980 and focusing in the 2000s.*****

Another note of caution is that small  business confidence has dropped significantly.
https://blogs.wsj.com/economics/2019/02/04/real-time-economics-small-business-sends-a-warning-signal/

All this said, the economy overall looks good from the viewpoint of employment and corporate earnings, but there certainly are mixed signals.

* https://homeguides.sfgate.com/economy-affect-housing-market-50583.html
** https://www.cnbc.com/2019/01/30/pending-home-sales-drop-in-december-despite-much-lower-interest-rates.html
https://tradingeconomics.com/united-states/existing-home-sales
https://www.cnbc.com/2019/01/22/december-existing-home-sales-down-6point4percent-vs-1point3percent-expected.html
*** https://www.cnbc.com/2019/01/24/weekly-jobless-claims.html
**** https://www.newsmediaone.com/surging-tariffs-force-tough-choices-in-louisiana-for-soybean-farmers/
*****
https://www.bls.gov/opub/mlr/2018/beyond-bls/the-fall-of-employment-in-the-manufacturing-sector.htm
https://www.bls.gov/web/empsit/ceshighlights.pdf