Housing, Credit Conditions, & More

Week in Review: Apr. 17-21

This week gave us six different releases on the housing market, which continues to be defined by high mortgage rates and low supply. The highlight of my week—at least in terms of economic news—was the Beige Book (Wednesday), which is a summary of interviews with business leaders in each of the 12 Fed districts. I usually make a joke about using the Beige Book as a sedative, but this time around it has some pretty useful information on credit conditions.

Monday

NAHB/Wells Fargo Housing Market Index

This index, based on a survey of home builders and pertaining only to the single-family housing market, increased (just barely) for the fourth straight month in April but is still very low by historical standards. Here’s the biggest takeaway from this release: “Currently, one-third of housing inventory is new construction, compared to historical norms of a little more than 10%.” High mortgage rates are suppressing demand, but they also seem to be preventing people from moving, limiting the supply of existing homes.

Gas Prices

Gas prices increased for the third straight week, up about $0.06, during the week ending April 17. Prices are now at their highest level since the middle of November but are still down about $0.40 over the past year.

TSA Checkpoint Travel Numbers

Travel numbers for the week ending 4/18/2023 were below 2019 levels for the second straight week, but only by 1.2%. Given high airline fares and what has to be diminished business travel, not bad.

Tuesday

New Residential Construction Report

This report covers a few different indicators. We’ll start with building permits (authorizations for new residential construction), which fell 8.8% in March and are down 24.8% year over year. Permitting for single-family units actually increased slightly, while permits for multifamily units plunged nearly 25%.

Starts inched lower in March, with the same dynamic of a slight uptick for single-family units but a decline for multifamily units, but over the past year multifamily starts have still performed significantly better.

The total number of housing units under construction fell slightly but remains pretty high by historical standards, and March set another new record for the most multifamily units under construction at one time (941,000).

These data can be pretty noisy from month to month, but I think the takeaways are the same as they have been: multifamily is outperforming single-family due to high mortgage rates, and overall residential construction is significantly lower than it was a year ago due to high interest rates and tightening credit conditions.

Wednesday

The Beige Book