Weekly economic review & outlook
Severe winter weather chills the housing market
March 29, 2021
You Need to Know
Week in review
Home sales hurt by poor February weather
New and existing home sales both dropped sharply during February, although this is expected to be only a temporary pause for the hot housing market.
Income/spending decline after January’s stimulus surge
Personal income fell by 7.1 percent for February with no new stimulus checks, while consumer spending dropped by 1.0 percent – a short-lived move as the third round of stimulus checks hit bank accounts in March.
Motor vehicle sales likely to rebound
After winter storms suppressed car buying activity for February, relatively normal weather in March should lead to a rebound in motor vehicle sales.
Strong gain expected for nonfarm payrolls, with a drop in the unemployment rate
With COVID cases continuing to fall and governments responding by easing in-person restrictions, the gain in jobs for March is expected to be the largest since October.
Much worse than usual winter weather over the second half of February sharply cut into housing activity (sales and starts) for the month. Existing home sales dropped by 6.6 percent to an annualized pace of 6.22 million units — the lowest level since last July. New home sales fell by even more, plunging by 18.3 percent as far fewer contracts for new construction were signed. Sales were down across all the major regions, but the biggest losses were in the Midwest and South where winter storms were prevalent. Even with this outsized decline, the annualized pace of 775,000 for new sales was 8.2 percent higher than a year ago.