Mixed Signals Show Continued Housing Market Struggles

Date: October 21, 2016 Last Edit: October 24, 2016

Home Sales Rising, But Housing Starts, Homebuilder Confidence Down

Several pieces of data for September and October suggest the US housing market is still struggling to recover following the recession. According to the latest National Association of Realtors data, Reuters reports that US existing home sales rose 3.2 percent in September to an annual rate of 5.47 million units, which was “well above economists’ expectations for an increase to a 5.35 million-unit pace.” Reuters adds that first-time buyers “accounted for 34 percent of transactions last month, the largest share since July 2012.” The AP also reports, saying the annual rate of 5.47 million units “was the strongest pace since June.” However, Commerce Department data reported by Bloomberg News shows that housing starts “unexpectedly fell in September” by 9 percent to a 1.05 million annualized rate, “on a plunge in multifamily building while permits rose more than forecast, in signs of fitful progress in residential real estate.” The “economists surveyed by Bloomberg called for a rise to 1.18 million. Permits, a proxy for future construction, jumped 6.3 percent to the fastest pace since November.” A third measure of the housing market, builder sentiment, also showed signals of weakness. Bloomberg News reported that data from a recent National Association of Home Builders/Wells Fargo report showed that builder sentiment “dropped to 63 (matching forecast) from the prior month’s 65 that was the highest since October 2015.” Bloomberg News added that the index of prospective buyer traffic “fell to 46 from 47,” the measure of six-month sales outlook increased to 72 – the highest in a year – and the gauge of current sales “decreased to 69 from an almost 11-year high of 71.”

What This Means For Small Businesses

The latest mixed signals from the housing market show that the housing sector continues to be sluggish. There is little here to encourage small business owners to feel optimistic about future economic growth.

Additional Reading

The Wall Street Journal and the AP also report the latest mixed housing data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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