“When she gets there she knows, if the stores are all closed.” (Led Zeppelin) Retailers fared well in April, as consumers spent broadly across most retail sectors after a slow start in the beginning of the year.
Retail Sales rose 0.3 percent from March to April, the Commerce Department reported, with sales highest at furniture stores, clothing stores and gasoline stations. On a year-over-year basis, retail sales jumped a solid 4.7 percent. The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of businesses throughout the nation, making it a key indicator regarding the state of our economy.
Home construction was a different story in April, however. Construction on new homes declined in April from March due in part to a rise in the price of lumber. April housing starts fell 3.7 percent from March to an annual rate of 1.287 million units, below expectations. Single-family home starts, which make up a big chunk of residential construction, rose 0.1 percent from March to April, while multi-dwelling starts of five or more units fell 12.6 percent. On a positive note, housing starts were up 10.5 percent from April 2017.
Building permits, a sign of future construction, fell 1.8 percent from March to an annual rate of 1.352 million units. National Association of Home Builders Chairman Randy Noel explained, “The record-high cost of lumber is hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market.”
Mortgage bonds struggled in the latest week, falling below a key technical level and hitting seven-year lows. Home loan rates are tied to mortgage bonds and, as a result, rates hit seven-year highs. However, rates remain attractive on a historical basis.
Housing news highlights an otherwise quiet week. The Bond markets will close early Friday at 2:00 p.m. ET ahead of the Memorial Day weekend, while Stocks are open for a normal session.
- We’ll get a double dose of housing news this week with New Home Sales on Wednesday and Existing Home Sales on Thursday.
- The May Federal Open Market Committee meeting minutes will be released Wednesday.
- As usual, weekly Initial Jobless Claims will be reported on Thursday.
- On Friday, Durable Goods Orders and the Consumer Sentiment Index will be released.
If you or someone you know has any questions about home loans, please contact me. I’d be happy to help.