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Report from
North America
Home building down 3% in 2022 - housing starts fell in
December
In 2022 the US began construction of 1.55 million homes,
3% fewer than were started in 2021 according to the US
Department of Commerce. Construction of new US homes
fell again in December by a seasonally adjusted 1.4% to
1.38 million. The drop in construction of homes followed
a decline in November when housing starts also fell by
1.8%
Single-family housing starts, which account for the bulk of
homebuilding, increased 11.3% to a seasonally adjusted
annual rate of 909,000 units last month, the highest level
since August. Apartment starts fell by 19%.
In Canada, the annual pace of housing starts in December
slowed 5% compared with November according to the
Canada Mortgage and Housing Corporation. The national
housing agency says the seasonally adjusted annual rate of
housing starts in December was 248,625 units compared
with 263,022 in November.
See:
https://www.census.gov/topics/housing.html
Home sales at 12-year low in December
Existing-home sales faded for the 11th straight month in
December to a seasonally adjusted annual rate of 4.02
million the National Association of Realtors reported.
Sales waned 1.5% from November and 34% from one year
ago. While sales fell to a 12-year low in December,
declining mortgage rates raised cautious hope that the
embattled housing market could be close to finding a
floor.
“December was another difficult month for buyers, who
continue to face limited inventory and high mortgage
rates,” said NAR Chief Economist Lawrence Yun.
“However, expect sales to pick up again soon since
mortgage rates have markedly declined after peaking late
last year.”
Existing-home sales in the Northeast slid 1.9% from
November to an annual rate of 520,000 in December,
down 28.8% from December 2021.
Existing-home sales in the Midwest fell 1.0% from the
previous month to an annual rate of 1.01 million in
December, falling 30.3% from one year ago.
In the South, existing-home sales slipped 2.2% in
December from November to an annual rate of 1.80
million, a 33.1% decrease from the previous year. At an
annual rate of 690,000, existing-home sales in the West
were unchanged from November but down 43.4% from
one year ago.
Existing-home sales totaled 5.03 million in 2022, down
17.8% from 2021, as last year’s rapidly escalating interest
rate environment weighed on the residential real estate
market.
See:
https://www.nar.realtor/research-and-statistics/housingstatistics/existing-home-sales
US adds 4.5 million jobs in 2022 - growth continueds
through December
The US economy added 223,000 jobs in December, which
was a little above the consensus estimate but with net
28,000 of downward revisions to the past two months,
figures were broadly in line with what was anticipated.
The details show jobs growth was led by the service sector
with education and health gaining 78,000 jobs,
leisure/hospitality adding 67,000 and trade and transport
gaining 27,000. Meanwhile construction saw employment
rise 28,000 with manufacturing up 8,000.
Over the year the US economy added 4.5 million jobs, the
second strongest year on record. However, we are starting
to see falls in some key areas, most notably temporary
help, which posted the fifth consecutive monthly fall. This
is an important signal as these workers are always the first
to be fired in a downturn (as they are the easiest to fire)
and are likely to indicate broadening weakness in coming
months.
Some sectors – notably tech – have announced large
layoffs. But the tech sector is a relatively small employer
and the government’s latest survey showed strong gains in
leisure and hospitality, healthcare, construction, and social
assistance.
“The labor market is strong but fragmented, with hiring
varying sharply by industry and establishment size,”
ADP’s chief economist, Nela Richardson, said. “Business
segments that hired aggressively in the first half of 2022
have slowed hiring and in some cases cut jobs in the last
month of the year.”
See:https://www.bea.gov/news/2022/gross-domestic-productsecond-quarter-2022-advance-estimate
Consumer sentiment index hits 8-month high as
inflation worries ease
US consumer sentiment hit its brightest note in eight
months at the start of the year as falling energy prices
eased fears about inflation, according to a closely watched
survey released on January 20.
The University of Michigan's consumer sentiment index
rose to 64.6 in January, its highest since May, from 59.7 in
December, with assessments of both current and future
conditions improving sharply on the month. The change in
tone was in part due to perceptions that inflation is easing -
if only in the near term.
"Inflation expectations are coming back under control,"
said Pantheon Macroeconomics chief economist Ian
Shepherdson in a note to clients. But Shepherdson noted
that the survey was more likely to correct downward given
the growing signs of a slowdown in the job market.
"We expect a material weakening in the labor market in
the next few months to make people nervous about job
security, so a renewed deterioration in confidence is a
decent bet," Shepherdson said.
See:
http://www.sca.isr.umich.edu/
Manufacturing activity contracted again in December
US manufacturing activity contracted for a second month
in December, capping the steepest annual slide in the key
factory gauge since 2008 and helping to further tame price
pressures.
The Institute for Supply Management’s gauge of factory
activity fell to 48.4 last month, the lowest level since May
2020 and down from 49 in November, according to data
released Wednesday. Readings below 50 indicate
contraction. The figure was in line with the median
estimate in a Bloomberg survey of economists.
The ISM index dropped 10.4 points in 2022, the biggest
annual retreat since the Great Recession. Thirteen of the
18 manufacturing industries surveyed reported contraction
last month, led by wood products, fabricated metals,
chemicals and paper.
See:https://www.msn.com/en-us/money/markets/usmanufacturing-contracts-for-a-second-month-prices-ease/ar-AA15Y4pc)
Furniture sales ‘frosty’ in December
Furniture and home furnishings sales slumped in
December in what was a down month for retail according
to the US Department of Commerce’s advance monthly
estimates.
For the month, the category posted an adjusted total of
$11.5 billion, down 2.5% from $11.8 billion in November,
but up 0.3% from December 2021’s $11.47 billion.
However, taking inflation into account, that year-over-year
increase reflects a decline in units sold.
For the year, furniture and home furnishings sales came in
at $143.4 billion, up a point compared with 2021, which
would again indicate a slip in units sold.
See:https://www.furnituretoday.com/retail/furniture-salesfrosty-in-cool-retail-december-according-to-docs-latest/
25% drop in 2023 housing starts forecast
A press release from Redfin says a post-pandemic sales
slump is likely to drive down home prices for the first time
in a decade. This is because of high mortgage rates likely
to make 2023 the slowest housing-market year since 2011.
Builders will continue to cut back on constructing new
homes this year with year-over-year declines of roughly
25% in building permits and housing starts continuing into
2023. Builders will back off most from building new
single-family homes. Construction of single-family homes
surged during the pandemic which means builders need to
sell the homes they have without adding more supply to
limit their financial losses.
Redfin predicts the median US home-sale price to drop by
roughly 4%, the first annual drop since 2012, to
US$368,000 in 2023. Prices would have fall more if not
for a lack of homes for sale. Redfin expects new listings to
continue declining through most of next year keeping total
inventory near historic lows and preventing prices from
plummeting.
Redfin’s forecasts for mortgage rates, home sales, and
home-sale prices account for a range of outcomes for
inflation, employment, and other macroeconomic factors.
See:https://investors.redfin.com/news-events/pressreleases/detail/845/redfins-2023-housing-outlook-a-postpandemicsales#:~:text=Redfin%20expects%20about%2016%25%20fewer,inflation%20and%20a%20potential%20recession.
Disclaimer: Though efforts have been made to ensure
prices are accurate, these are published as a guide only.
ITTO does not take responsibility for the accuracy of this
information.
The views and opinions expressed herein are those of
the correspondents and do not necessarily reflect those
of ITTO
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