Strategy in TECH...
In a result that was not expected by most industry analysts, contract signings to purchase previously owned homes dropped in December for the third month in a row. The news is widely viewed as yet another indicator of a housing industry slowdown, along with declining affordability and rising housing and mortgage costs.
New data from multiple sources are increasing economists concerns of an economic downturn within the next two years – perhaps even later this year. The latest readings on consumer confidence/sentiment and existing home sales show sharp downturns, sparking new debates on the real health of the economy.
Fully 70% of the U.S. economy is based on consumer spending, so economic and market pros watch moves in consumer sentiment closely…and so do I. In a new poll from research expert Gallup, we find consumer sentiment mixed – curiously so, considering how strong the economy seems to be at the moment.
As I write this on Wednesday, December 19th the stock market has closed down 351.98 points or nearly 1.5% to its lowest level of the year, according to CNBC. The broader S&P 500 Index also closed at a 2018 low. But as bad as this news is, perhaps even more concerning are two key indicators for the housing market – single-family housing starts and homebuilder sentiment – both of which showed disappointing results.
In what many feel is yet another sign of a brewing economic storm, sales of new single-family homes in October showed a significant drop of 8.9% below the rate of home sales in September, according to new data from the United States Census Bureau. With this result, the inventory of new homes available for sale jumped to 7.4-months, a 14% jump in unsold newly constructed homes.
Recently, I warned of some troubling housing related news. You may recall that a collapse in the housing sector was a key driver of the last recession in 2007-2009 that was so painful for the custom integration community, and for the country as a whole. In my report – Are You Prepared for the Coming Recession? – I noted a pronounced and troubling turn in several housing industry specific data, perhaps presaging another economic downturn. Now new government data shows that, once again, new residential sales have declined in the month of September.
Five Steps to Take Now to Protect Your BusinessOccasionally, I’ll chat with an integrator or other industry colleague about that ugly shared nightmare experience, otherwise known as the recession of 2007-2009. This recession, unlike others in the past, zeroed in like a torpedo on the residential construction market and dramatically reshaped the custom integration industry. For those of you joining the industry since that time, you dodged the bullet…but you also missed the lessons that survivors were forced to learn in order to keep afloat.
September housing starts, the government’s measure of new residential construction activity, showed an overall decline to a seasonally adjusted annual rate of 1,127,000 units. This rate is down 4.7% from the revised August rate of 1,183,000 units. This is the third monthly decline in a row indicating a softening in the construction of new homes – and the lowest level of construction since September 2016.
Calling 2016 “a year of transition,” NAPCO Media announced yesterday that it has printed its last Technology Integrator (TI) magazine – deciding to withdraw from print media and reinvent itself into an online-only property. The move has been rumored for weeks, and in an online post yesterday attributed to the “TI Staff”, the company made the news official.
Apple, Inc. is starting to look brown, bruised, and past its prime in wake of the surprising quarterly results that showed growth in sales of their bellwether iPhone product to be the slowest since the company launched the product category in 2007. Not only that, but the company forecast an overall sales decline for the first quarter of 2016 – their first sales decline since 2003. Reaction from Wall Street was swift with the price of Apple stock down more than 6% in mid-afternoon trading.
