Market Recap: Housing Market Index Up, Housing Starts Surge, Building Permits Increase
Mortgage rates trended downward this week, ahead of next week’s holiday. Retail sales activity slowed, but remains positive. The housing market index surged, despite some home builders’ reservations regarding the proposed tax plan. Housing starts soared and building permits increased as well.
Retail sales activity slowed in October, but was still positive, up 0.2% month-over-month. Less autos, sales were up 0.1% month-over-month and less autos and gasoline, sales were up 0.3% month-over-month. The strong September gain was driven by hurricane recovery, as victims replaced storm-damaged vehicles and other personal items. This month’s moderate gain was strongly influenced by automotive sales, specifically, up 0.7% month-over-month, but overall consumer spending has slowed.
The National Association of Home Builders’ (NAHB) housing market index hit an 8-month high in November, rising to 70, four points above October’s reading. Current sales conditions increased to a level of 77, expectations for the next six months dropped one point to 77, and buyer foot traffic increased to 50, the first neutral reading in six months. Any reading above 50 is considered positive. Despite expressing discontent with the latest proposed tax changes, home builders remain confident.
In November, housing starts soared, up 13.7% to a seasonally adjusted annual rate of 1.29 million units. Building permits also climbed, up 5.9% to a level of 1.297 million units. Growth was driven by gains in the South, as post-hurricane reconstruction continues. Housing starts and building permits are used to gauge future housing activity like new home sales.
The House of Representatives passed the GOP tax reform proposal on Thursday with a vote of 227 to 205. The Senate will vote on their proposal next, which differs from the House proposal in a number of ways. President Trump’s goal is to finalize legislation before Christmas, a move that would impact tax filings as early as 2018.
Sources: Bloomberg, CNBC, CNBC, MarketWatch, Mortgage News Daily, The New York Times