Market Forecast: Retail Sales, Housing Market Index, Housing Starts and Building Permits
Last week, there was no significant mortgage rate movement to report. This week’s important housing reports include the National Association of Home Builders’ (NAHB) housing market index on Monday and housing starts and building permits on Tuesday. Other market moving reports include the retail sales report, scheduled for release on Monday.
The retail sales report counts total receipts at stores that sell merchandise and related services to final consumers. Consumer spending accounts for two-thirds of economic activity and is a driving force of Gross Domestic Product (GDP) growth. Retail sales have slipped in recent months, with February marking the third straight month of declines. In February, retail sales dropped 0.1% month-over-month, however, excluding the more volatile sales of autos, retail sales improved 0.2% month-over-month. Spending tends to slow down after the busy holiday season, but some economists expect national tax cuts to stimulate more spending activity.
The NAHB housing market index surveys builders on their opinions about current sales conditions, sales expectations for the next six months, and buyer foot traffic. Any reading above 50 is considered positive. Home builder sentiment has hit record levels in recent months, including reaching the highest reading since 1999 in December. In March, current sales conditions were unchanged at 77, expectations for the next six months dropped to 78, and buyer foot traffic fell to 51. The overall index dropped one point to a level of 70. Despite some uneasiness surrounding lumber and aluminum tariffs, most builders are confident about corporate tax cuts and strong buyer demand.
Housing starts track ground broken on residential projects and building permits track permits issued. These reports are used to assess construction activity and predict future housing reports like new home sales. In February, housing starts fell 7% to an annualized rate of 1.24 million and building permits dropped 5.7% to a level of 1.3 million. The biggest factors influencing these numbers include rising materials costs, shortage of workers, and lack of buildable lots.
Housing experts agree, this spring will be a competitive market for home buyers. One way for buyers to expedite the home buying process is to get preapproved before they start shopping. Mortgage preapproval shows sellers the buyer is committed to their offer and how much they are able to spend.
Sources: Bloomberg, Bloomberg, CNBC, MarketWatch, Mortgage News Daily