Market Forecast: Housing Market Index, Retail Sales, Housing Starts and Building Permits
Mortgage rates are trending slightly downward. On Tuesday, the National Association of Home Builders (NAHB) will release its August housing market index and the July retail sales report also comes out. On Wednesday, July’s housing starts and building permits data will be released.
The NAHB housing market index is a survey of builders’ perceptions of present home sales, expected sales in the next six months, and buyer foot traffic. Any reading above the neutral level of 50 is considered positive. In July, the index dropped slightly to a level of 64.
Consumer spending makes up two-thirds of total economic activity and the retail sales report counts total spending on consumer goods and services. Retail sales numbers have not improved greatly yet this year. Last month, total retail sales were down 0.2% month-over-month, and retail sales without auto were down 0.2% month-over-month. Less gas, the figure was down 01% month-over-month.
Housing starts and building permits are used to gauge future construction activity. Housing starts count residential projects where ground has broken and building permits track permits issued. In June, housing starts increased by 8.3% to a seasonally adjusted annual rate of 1.22 million, the highest level since February 2017. Building permits also jumped, up 7.4% to a seasonally adjusted annual level of 1.25 million units, the highest level since March 2017.
Housing numbers have been positive or neutral throughout the first part of the year. Mortgage rates remain historically low, but home prices are appreciating because of inventory constraints. An increase in housing starts and building permits would indicate that housing inventory is starting to get replenished.
Sources: Bloomberg, MarketWatch, Mortgage News Daily