Posted On November 13, 2017
Mortgage rates trended slightly upward last week. The new GOP House tax proposal saw a few iterations as well as the release of the GOP Senate tax proposal. This week, the retail sales report comes out on Wednesday, the National Association of Home Builders’ releases their housing market index on Thursday, and housing starts and building permits are scheduled for release on Friday.
Retail sales track the total amount of transactions at stores that sell merchandise and related services. Consumer spending makes up two-thirds of economic activity and retail sales is a strong indicator of consumer spending. Healthy consumer spending is positive in relation to housing as well. In September, consumer spending was up 1.6% month-over-month, but up 0.5% less gas and autos. The uptick in automotive sales may have been caused by hurricane victims replacing storm-damaged vehicles.
The NAHB housing market index measures builders’ perceptions on current conditions, expectations for the next six months, and buyer foot traffic. Any reading above 50 is considered positive. In October, the index read 68. Despite construction industry setbacks like increasing materials cost and limited labor availability, the index has been largely positive this year.
Housing starts and building permits are used as a gauge to project future housing activity, like new home sales. Housing starts include residential projects where ground has broken and building permits count permits issued. In September, housing starts and building permits each decreased to levels of 1.127 million and 1.215 million, respectively.
Winter is typically a slower season for housing, especially as the year comes to a close. The Federal Open Market Committee meets once more in December and is expected to raise rates an additional time. Even after this year’s two rate hikes, mortgage rates remain historically low.