Strategy in TECH...
In new data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, the readings appear split with housing starts showing increases while new home sales declined. Housing, a prime component of the overall U.S. GDP has been in a bit of a swell over the last couple of months, driven largely by low interest rates stimulating demand for homes.
In the choppy waters of today’s current economy, we continue to get mixed signals – this time from the housing market. Last week, we learned that residential construction starts declined in June by 0.9% below the rate in May. This week, we find that sales of newly built homes in June increased by 7% as compared to sales in May.
As regular Strata-gee readers know, I follow basic economic data for our readers. Not all economic data, just that data I feel are germane to the custom integration and consumer electronics industries. Normally, that is a fairly sane and sedate task – but lately, it has gotten a bit crazy, with wild up/down swings the likes of which I haven’t seen since the last great recession. Take housing starts, for example…
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.
I’ve been sounding the alarm about a housing slowdown for a couple of months now, starting with this overall look at how a housing industry-led recession could be just around the corner. Now, new data on housing, the industry that was a major driver of the last recession, continues to offer a bearish outlook with housing construction starts dropping a significant 5.3% in the month of September.
In a result that exceeded economists’ estimates, November overall housing starts jumped an impressive 10.5% to a seasonally adjusted annual rate of 1.173 million units. Well over the revised October rate of 1.062 million units, it also exceeded the 1.007 million units in November last year by 16.5%.
More importantly for our industry, single-family home construction rates jumped as well.
The Associated Builders and Contractors, Inc., (ABC) a builders trade association, held their third annual Mid-Year Construction Forecast presentation this week…inviting economists from three industry-related associations to present their outlook on the construction industry. This year, the invited economists included Kermit Baker (American Institute of Architects, AIA), David Crowe (National Association of Home Builders, NAHB), and their own Anirban Basu (ABC).
The economists this year were, overall, cautiously optimistic – with a heavy emphasis on caution.
The U.S.Commerce Department released new data today detailing an unexpected uptick in housing “starts” or the number of homes that had begun construction during the month of October. According to the report, starts in October increased to a seasonally adjusted annual rate (SAAR) of 894,000 units or 3.6 percent higher than the revised September level of 863,000.
