News & Events

Economic Advisor: August 22, 2018
August 22, 2018


 

Housing starts saw a weaker-than-anticipated recovery, while retail sales got a shot in the arm, and layoffs dropped slightly.

Housing Starts

After hitting a nine-month low in July, starts on construction of new homes didn’t rebound as much as the housing market had anticipated. Starts on private housing rose 0.9 percent to an annual rate of 1.16 million, according to last week’s joint report from the Census Bureau and the Department of Housing and Urban Development.

This isn’t where housing market watchers want new home construction to be. Economists had forecasted housing starts would hit an annual rate of 1.27 million for the month. Compared to the same period last year, July’s housing starts were 1.4 percent below July 2017’s pace of 1.18 million.

Starts on single-family homes were in line with the rest of the market, growing 0.9 percent in July to a rate of 862,000. Starts on buildings with five units or more rose 3.1 percent to a rate of 303,000.

“The solid economic expansion and firm job market should spur demand for new single-family homes in the months ahead,” noted Robert Dietz, chief economist for the National Association of Home Builders, in a public statement. “Meanwhile, builders continue to monitor how tariffs and the growing threat of a trade war are affecting key building material prices, including lumber. These cost increases, coupled with rising interest rates, are putting upward pressure on home prices and contributing to growing affordability challenges….”

Retail Sales

Retail sales plowed past projections, growing 0.5 percent to hit $507.5 billion in July, according to last week’s report from the Census Bureau. This was well past economists’ forecast of a 0.1 percent gain for the month. Compared to the same period a year ago, July’s sales were 6.4 percent higher than July 2017’s receipts.

Some key drivers for July’s increase included sales at clothing and clothing accessories stores, which grew 1.3 percent; food services and drinking establishments, which also increased 1.3 percent; non-store retailers, such as online stores and kiosks, which gained 0.8 percent; and grocery stores, which also rose 0.8 percent. It’s also important to note that sales at gasoline stations not only increased 0.8 percent during July but were up 22.2 percent over July 2017’s sales.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending August 11 notched down slightly to 212,000, a drop of 2,000 claims from the prior week’s total of 214,000, according to last week’s report from the Employment and Training Administration. This was less than economists’ predictions of a slight increase to 215,000.

The four-week moving average, which is considered a more stable measure of jobless claims, ticked up to 215,500, a gain of 1,000 claims from the preceding week’s average of 214,500 claims.

The latest report marked the 180th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market. 

This week, we can expect:

  • Wednesday — Existing home sales for July from the National Association of Realtors.
  • Thursday — Initial jobless claims from the Employment and Training Administration; new home sales for July from the Census Bureau.
  • Friday — Durable goods orders for July from the Census Bureau.

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