Market Recap: Retail Sales Drop, Housing Market Index Down, Construction Stalls

  • March 16, 2018

CMG Image

Mortgage rates trended slightly downward this week after a multi-week climb.  Some market analysts attribute the rate drop to this week’s tariff proposals and other political news.  Retail sales scaled slightly back in February, as is expected following the holiday season.  The housing market index dropped from last month’s 19-year high.  Housing starts and building permits slipped.

Retail sales slowed in February, driven primarily by declines at auto dealers, gas stations, and department stores.  Total retail sales dropped 0.1% month-over-month, but less gas and auto sales are up 0.3%.  Retail spending tends to pull back in the months following the holiday season.  Spending at internet retailers and apparel and sporting goods stores was strong.  February marks the third straight month of retail sales declines.  

The National Association of Home Builders’ (NAHB) housing market index dropped 1 point in March to a level of 70.  Current sales conditions were unchanged at a reading of 77, sales expectations for the next six months fell to 78 and buyer foot traffic fell to 51.  Any reading above 50 is considered positive.  Although home builders were optimistic about corporate tax cuts stimulating their businesses, new challenges from lumber and steel tariffs are complicating construction activity.  However, the NAHB addressed the continued strong consumer demand in a statement, “builders’ optimism continues to be fueled by growing consumer demand for housing and confidence in the market.”

Housing starts and building permits are used to predict future housing activity like new home sales.  In February, housing starts declined 7% to an annual rate of 1.24 million.  Building permits also dropped, down 5.7% to 1.3 million.  Despite the month-over-moth fall, January’s rate of construction was the highest in ten years, and building permits issued are stronger year-over-year.  Even with production problems, buyer demand is strong and the need for housing inventory persists.

Although mortgage rates are expected to rise this year, limited housing inventory is tightening the market more.  Sustained buyer demand and slowed construction are creating a competitive market for home buyers.  It is not uncommon to see numerous offers on a single home, especially in a heated region.  One way for potential home buyers to stay competitive in a tight housing market, is to get preapproved before shopping for a home.  Through preapproval, home buyers know how much home they can afford and show sellers they will be able to secure financing when their offer is accepted.   

Sources: Bloomberg, CNBC, MarketWatch, MarketWatch, MarketWatch, Mortgage News Daily

Gerry Houseknecht
Loan Officer
NMLS # 91019
Branch NMLS # 1627273
GA 66186

Gerry Houseknecht

PHONE: (984) 239-2906

CMG Image
© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).