Retail Sales & A Housing Recession
Week in Review: August 15-19
Here’s the good news: inflation appears to have peaked. Here’s the bad news: the single family housing market is in recession. Let’s get this party started!
NAHB Housing Market Index
This index, which measures the health of the housing market, fell for an eighth consecutive month in August and is now at its lowest level since June 2014. The component indices, which cover present single-family sales, expected single-family sales over the next six months, and traffic of prospective buyers, each declined in August as did the indices for all four geographic regions of the U.S. Mortgage rates remain rather low by historic standards, but people became accustomed to 3% on a 30-year fixed mortgage rate, and that’s gone!
Building Permits & Housing Starts
The Census Bureau’s residential construction data tell the same tale about the housing market. Building permits fell 1.3% in July but are up 1.1% from July 2021. Housing starts fell 9.6% for the month and are down 8.1% year over year. Housing completions inched up 1.1% in July. The number of housing units under construction barely dipped in July. June was the highest level ever recorded.
In short, there are many homes under construction, in part because builders are waiting for components and other niceties to complete homes. As these homes hit the market, many will be sold at a discount. I’ve been telling many folks that now is actually a better time to purchase a home since there is less competition and fewer bidding wars. Yeah, I know, mortgage rates are higher—get over it and just refinance at some point in the future.
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