“My mama told me, ‘You better shop around.'” (The Miracles) Consumers weren’t afraid to shop around in June, while construction data did little to lessen inventory woes.
U.S. homebuilders broke ground on fewer homes than expected in June, due in part to higher costs for lumber, lack of available land and a shortage of construction workers. June housing starts fell 12.3 percent from May to an annual rate of 1.173 million units. This was the lowest level since September 2017, as housing starts declined in all four major regions of the country. Starts were down 4.2 percent from June of last year.
Single-family starts, which make up the bulk of residential housing, fell 9.1 percent in June from May. Multi-family dwellings of five or more units plunged 20.2 percent month-over-month. Building permits, a sign of future construction, also declined 2.2 percent from May to an annual rate of 1.273 million. June’s figures were a disappointment given that a lack of inventory has been an ongoing challenge to homebuyers in many areas of the country.
Retail sales went in the opposite direction in June, as they were up 0.5 percent from May, the Commerce Department reported. May’s figure was also revised sharply higher to 1.3 percent from 0.8 percent. From June 2017 to June 2018, sales rose 6.6 percent.
The retail sales report is considered the timeliest indicator of broad consumer spending patterns. The key takeaway is that people spend more when they are less concerned about the economy and their employment. Strong retail sales typically signal a belief that the economy is doing well.
Mortgage bonds continued to trade in a sideways pattern in recent days due in part to the mix of economic data. Home loan rates remain near historic lows.
Look for key housing reports and news on second quarter economic performance.
- Look for housing news with Existing Home Sales on Monday and New Home Sales on Wednesday.
- On Thursday, Durable Goods Orders and weekly Initial Jobless Claims will be delivered.
- Gross Domestic Product and the Consumer Sentiment Index will be released Friday.
If you or someone you know has questions about home loan rates or products, please contact me. I’m always happy to help.