Markets in a Minute, Housing Market News, August 23, 2023

This week’s financial and housing market activity update…

In July, Reuters reports, the odds of a “soft-landing” rose as U.S. retail sales exhibited robust performance, surpassing initial expectations with the most substantial upswing in six months. Consumers sustained their spending patterns in spite of elevated interest rates, underscoring the economy’s resilience.
The wholesale price index experienced a more pronounced increase than originally projected during July. This unexpected rise challenges the impression that inflationary pressure has been alleviated just yet.
The minutes released from the prior month’s Federal Reserve meeting provided a suggestive glimpse into the future, hinting at the likelihood of further rate hikes. The increase in the price index only reinforces the expectation of upcoming rate hikes. This indication was fueled by officials’ persisting concerns regarding the stubborn persistence of inflation.

A significant surge was observed in housing starts for single-family residences during July. The granting of permits for forthcoming construction projects similarly demonstrated an uptick, in contrast to a backdrop of elevated mortgage rates. According to Reuters’ reporting, single-family housing starts rose 6.7% in July. Single-family building permits were up 0.6%, overall starts up 3.9%, permits up 0.1%, and manufacturing increased 0.5%. Reuters described the current shortage of existing homes as “acute”.
Despite the surge in housing starts, the escalation in interest rates led to a decline in home builder sentiment for the first time in seven months, arriving at its lowest level since May.
In July, there was a 35.5% year-over-year increase in applications for purchasing newly constructed homes. Escalating scarcity of available inventory drove this surge in demand, resulting in new homes contributing significantly to overall sales.