NAM Monday Economic Report: Housing Market Struggles Persist in Latest Data
Monday, November 26, 2018
Posted by: Alyce Ryan
AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report” from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).
- The latest data show housing market struggles persisting, with activity much weaker in the second half of 2018 than the rates earlier in the year. Affordability (e.g., higher mortgage rates, increased raw material costs) and workforce issues have taken a toll on demand, but weather has also played a role of late. Along those lines, Freddie Mac reported that the average interest rate for a 30-year fixed-rate mortgage was 4.94 percent on November 15, the highest mortgage rate since February 24, 2011.
- With that in mind, homebuilder confidence declined in November to the lowest level in more than two years. In a similar way, existing home sales remain very soft in every region of the country, down 5.1 percent year-over-year in October, despite rising in the latest month for the first time since March.
- Housing starts rose 1.5 percent in October, up from an annualized 1,210,000 units in September to 1,228,000 units in October mainly for multifamily units, which can be highly volatile from month to month. Single-family starts decreased for the second straight month. On a year-over-year basis, housing starts fell 2.9 percent.
- Housing permits also declined, down 0.6 percent from 1,270,000 units at the annual rate in September to 1,263,000 units in October, with slightly reduced activity for both single-family and multifamily units. To the extent that permits are a proxy of future activity, the data provide mixed comfort, suggesting a faster pace than the current figures but off from the rates earlier in the year (which regularly exceeded 1.3 million units).
- New durable goods orders were disappointing, falling 4.4 percent in October, largely on significant declines in aircraft sales, which can be highly volatile from month to month. Excluding transportation, new orders edged up 0.1 percent in October. Core capital goods, which are often seen as a proxy of capital spending in the U.S. economy, were unchanged for the month and have drifted lower since reaching an all-time high in July. With that said, the longer-term trend for these measures remains encouraging, with new orders for durable goods jumping 6.7 percent since October 2017.
- Consumer confidence slipped again in November, according to the University of Michigan and Thomson Reuters, on income concerns, even as they continue to suggest Americans are upbeat overall. This could reflect recent stock market volatility, among other things. Along those lines, the Dow Jones Industrial Average has erased its gains for 2018 with declines last week, with the index down more than 8 percent from the all-time high recorded on October 3.
Read Full NAM Monday Economic Report 11.26.2018