Excitement Builds Over Construction
Housing Starts and Building Permits both jumped in June.
Housing Starts surged 8.3 percent from May to an annual rate of 1.215 million units, the Commerce Department reported. This is the highest level since February and comes after three straight monthly declines. Single-family starts, which represent the largest share of the residential housing market, rose 6.3 percent. The multi-family dwelling sector soared as well. Housing Starts also were up 2.1 percent from June 2016.
June Building Permits, a sign of future construction, rose 7.4 percent from May's revised figure to an annual rate of 1.254 million.
New home construction is a welcome sign as tight inventories of homes for sale continue to push home prices higher around much of the country. Data analytics firm CoreLogic reported that home prices nationwide rose 6.6 percent from May 2016 to May 2017 and 1.2 percent from April to May of this year. CoreLogic forecasts indicate that home prices will increase by 5.3 percent on a year-over-year basis from May 2017 to May 2018.
Job Growth Strong. Wage Growth and Retail Sales Weak.
Job growth remains strong in 2017, but wage growth is stagnant.
Employers added 222,000 new jobs in June, well above expectations, the Labor Department reported. April and May employment gains both were revised up for a total of 47,000 new jobs more than previously reported. Employment growth has averaged a solid 180,000 per month in 2017, in line with the average monthly gain of 187,000 in 2016. Average hourly earnings showed just a 0.2 percent gain from May and 2.5 percent gain year over year. May average hourly earnings also were revised lower. The unemployment rate was little changed at 4.4 percent.
Meanwhile, retail spending, which makes up two-thirds of U.S. economic activity, didn't register much enthusiasm in June.
The Commerce Department reported that Retail Sales fell 0.2 percent, the second monthly decrease in a row. Consumers spent less at department and food stores; receipts at gas stations also declined. Despite the month-to-month drops, Retail Sales were 2.8 percent higher than they were in June 2016.
For those in the market for a new home or a refinance, home loan rates remain near historic lows. If you have any questions about home loan rates or loan products, please contact me. I'd be happy to help.