A Very Merry Week in Review

Gas Prices, Population Growth, and Inflation

Happy Hannukah, Merry Christmas, and overall good wishes. This is the 51 of 52 Week in Review posts this year. If you’re a free subscriber, enjoy the free preview and consider subscribing before our one-year anniversary blowout bonanza (30% off new paid subscriptions) ends on Boxing Day.

A Sage Economics subscription was also named one of Digital Newsletter Digest’s hottest Christmas gifts of 2022, so I encourage you to give it to all your loved ones. (Full disclosure, Digital Newsletter Digest is not a real publication, but if it were, Sage Economics would have made their hottest Xmas gifts list.)

If you’re a paying subscriber, enjoy this Week in Review that covers 16 different indicators, which represents a rather full slate for the week before Christmas. In short, this is a stocking stuffer!

Monday

Gas Prices

Gas prices keep falling and are now down to $3.234/gallon, the lowest price registered since July 2021. We at Sage work from home (unless I’m on the road delivering speeches), and so we benefit less from lower fuel prices. Shucks!

In related news, the White House announced last week that they’d start replenishing the Strategic Petroleum Reserve, and—love or hate the current POTUS—the Feds are going to net billions by selling from the SPR at an average of $94.25/barrel and refilling now, when per barrel prices are down to around $80/barrel.

NAHB/Wells Fargo Housing Market Index

This measure of homebuilder sentiment declined in December, the 12th straight monthly decline (yes, that’s every month of 2022). The index is now at its lowest level since April 2020, which was a particularly bad month for every kind of sentiment out there, and is roughly in line with 2012 levels. Chalk this one up to high borrowing and construction input costs, including labor.

Tuesday

New Residential Construction

Building permits (i.e., permission to start building a new house) fell 11.2% in October and are down 22.4% year over year. That’s the largest annual percentage decline since 2009 which, if you’ll recall, was a particularly bad time for homebuilding.

Permits for multifamily construction (buildings with 5+ units) fell 17.9% for the month, which is a sharp reversal for a segment that had been strong pretty much throughout 2022. There is a lot of chatter about major money center banks pulling out of pending real estate deals, which might help explain declining permitting in the apartment segment despite elevated occupancy.

Overall housing starts fell 0.5% for the month, while multifamily starts increased 4.8% (permits are a leading indicator, starts a coincident one). A lot of authorized units were not started over the past two years due to supply chain issues. As some of those issues abate, expect starts to hold up better than authorizations in coming months.

For similar reasons, there were a bit more than 1.7 million housing units under construction in November, matching October for the most since at least 1970 (when the Census Bureau began tracking it). November also saw the most housing units completed since August 2007, so inventory levels are improving, especially given what came out on …

Wednesday

Existing Home Sales