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Report from
North America
Housing starts slide more than expected
New home construction slumped to a 19-month low in
September as housing starts dropped 8% from August to a
seasonally adjusted annual rate of 1.564 million according
to the Department of Housing and Urban Development.
On a year-on-year basis, September’s annual housing start
rate was down 7.7%. These declines come after a strong
12% month-on-month increase in August.
The yearly decreased pace in homebuilding is mostly
attributable to a large decline in the single-family sector
which posted an 18.5% yearly decrease compared to a
16.5% annual increase in the multifamily sector. Monthon-
month, both sectors were down with single family
dropping 3% and multifamily falling 13%.
Regionally, housing starts were down month- on- month in
the Northeast (-12.5%), Midwest (-2.7%) and South (-
13.7%), but they were up 4.5% in the West. On a yearly
basis, housing starts were down in the Midwest (-10.8%),
South (-8.8%) and West (-11.2%), but up 15.7% in the
Northeast.
As house prices rise developers are constructing more
multifamily units which tend to cost less than single
family houses according. It appears this trend may
continue as multifamily building permits were issued at a
seasonally adjusted annual rate of 644,000, up 8% monthon-
month and 25.5% year- on-year while, single-family
building permits were down 3% from August and down
17% from a year ago.
The declines should come as no surprise as homebuilder
confidence declined for the 10th consecutive month in
October reaching its lowest level since August 2012,
excluding in the spring of 2020.
Despite decreases in housing starts and permits some
market observers still feel there are reasons to remain
optimistic. As the number of starts and permits decreases
builders have more time and manpower to devote to
existing projects driving the number of housing
completions up. Overall, completions were up 6% from
August and 16% year- on-year to a seasonally adjusted
annual rate of 1.427 million.
There are currently 910,000 multifamily units under
construction, the highest level since the mid-1970s
according to the Census Bureau.
Canada’s annual rate of housing starts jumped 11% to
299,589 units in September from 267,443 in August
reaching its highest monthly level since November 2021.
Data from the Canada Mortgage and Housing Corporation
showed the rate of urban starts increased 12% to 276,142
in the month while multi-unit urban starts surged 16% cent
to 216,549 units.
The pace of urban starts of single-detached homes
remained flat at 59,593 units. The gain was mostly due to
recorded large increases in multi-unit starts on a
seasonally adjusted annual rate basis in the major cities of
Montreal, Toronto and Vancouver.
See:
https://www.census.gov/construction/nrc/pdf/newresconst.pdf
and
https://www.cmhc-schl.gc.ca/en/professionals/housing-marketsdata-and-research/housing-data/data-tables/housing-marketdata/monthly-housing-starts-construction-data-tables
Existing-home sales slip
Existing-home sales fell again in September, the eighth
month in a row of declines, according to the National
Association of Realtors. Total existing-home sales
retracted 1.5% from August to a seasonally adjusted
annual rate of 4.71 million in September. Year-over-year,
sales waned by 23.8% (down from 6.18 million in
September 2021). The housing sector continues to undergo
an adjustment due to the continuous rise in interest rates.
Existing-home sales in the Northeast dwindled 1.6% from
August to an annual rate of 610,000 in September,
retreating 18.7% from September 2021. Existing-home
sales in the Midwest slid 1.7% from the previous month to
an annual rate of 1,140,000 in September, falling 19.7%
from September 2021.
In the South, existing-home sales pulled back 1.9% in
September from August to an annual rate of 2,080,000, a
decline of 23.8% from this time last year. Existing-home
sales in the West were identical to last month at an annual
rate of 880,000 in September, but down 31.3% from one
year ago.
See:
https://www.nar.realtor/newsroom/pending-home-saleswaned-10-2-in-september
Job creation remains above expectations despite
inflation
Another solid US jobs report for September increased the
likelihood the Federal Reserve will go ahead with an
interest rate hiking campaign many investors fear will
push the economy into a recession.
The Department of Labor reported the unemployment rate
fell to 3.5%, lower than expectations of 3.7% in an
economy that continues to show resilience despite the
Fed's efforts to bring down inflation by weakening growth.
Non-farm payrolls rose by 263,000 jobs, more than the
250,000 figure economists polled by Reuters had forecast.
The job gains, lower unemployment rate, and continued
healthy wage growth point to a labor market Fed officials
will likely still see as keeping inflation too high.
Manufacturing employment continued to trend up in
September, adding 22,000 jobs. Manufacturing has added
an average of 36,000 jobs per month thus far in 2022.
Employment in construction also continued its upward
trend (+19,000), in line with average monthly job growth
in the first 8 months of this year.
See:
https://www.bea.gov/news/2022/gross-domestic-productsecond-quarter-2022-advance-estimate
Consumer sentiment inches up
U.S. consumer sentiment increased slightly in early
October reaching its highest level in six months as an
easing of supply constraints offset concerns over inflation
and an economic slowdown.
The preliminary estimate of the consumer sentiment index
published by the University of Michigan stood at 59.8 in
October, up from 58.6 in September and the highest
reading since April. Sentiment is now 9.8 points above the
all-time low reached in June but this improvement remains
tentative as the expectations index declined by 3% from
last month said Joanne Hsu, the Survey's director.
"Continued uncertainty over the future trajectory of prices,
economies, and financial markets around the world
indicate a bumpy road ahead for consumers," Hsu said.
See:
http://www.sca.isr.umich.edu/
Furniture and wood products manufacturers reported
contraction in September
While seeing a slight decline compared to August,
September manufacturing output remained on the right
side of growth according to the most recent edition of the
Manufacturing Report on Business by the Institute for
Supply Management (ISM).
The report’s key metric, the PMI, was 50.9 (a reading of
50 or higher indicates growth), following back-to-back
readings of 52.8 in July and August.
While it indicated the 28th consecutive month of growth
September showed the lowest PMI reading since May
2020, when it came in at 43.5.
Seven of the 17 sectors in the ISM survey reported
contraction in September compared to August, they are:
Furniture and Related Products; Textile Mills; Wood
Products; Printing and Related Support Activities; Paper
Products; Chemical Products; and Fabricated Metal
Products.
Of the six biggest manufacturing industries, four —
Machinery; Transportation Equipment; Food, Beverage &
Tobacco Products; and Computer & Electronic Products
registered moderate to strong growth in September.
(See:https://www.ismworld.org/supply-management-news-andreports/reports/ism-report-on-business/pmi/august/
Transshipped products – attempts to evade duties
The US Customs and Border Protection (CBP) has issued
a final affirmative determination as to evasion pursuant to
the Enforce and Protect Act (EAPA) by six US importers.
According to the Kitchen Cabinet Manufacturers
Association, the importers were “involved in a scheme to
transship wooden cabinets from China through Malaysia
to avoid the payment of antidumping and countervailing
duties.”
According to the notice of determination, “In light of
CBP’s determination that [the companies] entered covered
merchandise into the customs territory of the United States
through evasion … CBP will suspend or continue to
suspend the entries subject to this investigation until
instructed to liquidate these entries.”
See:
https://mcusercontent.com/edf6cb794d7dcce4fa01241a6/files/d116d8c4-59e0-ebbe-e086-626a5657cb03/Notice_of_Determination_as_to_Evasion.pdf
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