Market Recap: Construction Spending Down, New Home Sales Up, ADP Employment Report Up
Mortgage rates have not moved significantly this week, trending downward according to some sources. Construction spending declined in December, after posting strong numbers in December. New home sales surged to a seven-month high. The ADP employment report was positive.
US construction spending declined in December, down 0.6% month-over-month. After an increase in November, construction activity lost momentum. Annually, however, spending is up 1.6% from December 2017. Spending on private residential projects, specifically, is down 1.4% month-over-month, after a strong 3.4% gain in November. Higher mortgage rates in December may have contributed to the slowdown.
New home sales, or the sales of newly constructed homes, hit a seven-month high in December, up 3.7% month-over-month to a seasonally adjusted annual rate of 621,000 units. Housing activity slowed down toward the end of 2018. Regionally, new home sales increased the most substantially in the Northeast, up 44.8% in December, followed by the South up 5.0% and the West up 1.4%. In the Midwest, new home sales were down 15.3%. At December’s pace it would take 6.6 months to exhaust all available for sale inventory.
The ADP employment report added 183,000 jobs in February and a revised 300,000 jobs in January. Small businesses added 12,000 jobs, medium-sized companies added 95,000 jobs and large firms added 77,000 jobs. Moody’s Analytics chief economist Mark Zandi explained, “jobs gains are still strong, but they have likely seen their high-water mark for this expansion.” Gross Domestic Product (GDP) growth is expected to slow down in the first quarter of this year.
Reports delayed by the partial government shutdown earlier this year are starting to come out and give us a better idea of what to expect from the housing market this Spring and Summer. In recent years, buyers have struggled to find available for-sale inventory to meet their needs. However, home builders are positive and in some metros inventory is finally starting to increase.
Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily