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Report from
North America
US housing starts hit three-year low
US homebuilding plunged to a more than three-year low in
August as a resurgence in mortgage rates weighed on
demand for housing, but a jump in permits suggested new
construction remained supported by a dearth of homes on
the market.
The decline in housing starts reported by the U.S.
Department of Commerce was the largest in a year and
occurred across the board. Housing starts tumbled 11.3%
to a seasonally adjusted annual rate of 1.283 million units
last month, the lowest level since June 2020. Data for July
was revised lower to show starts at a rate of 1.447 million
units instead of the previously reported 1.452 million
units.
Single-family housing starts, which account for the bulk of
homebuilding, dropped 4.3% to a rate of 941,000 units last
month. Single-family homebuilding dropped in the
Northeast and Midwest and slumped 26.9% in the West,
which was blamed on Hurricane Hilary. It rose in the
densely populated South.
Building permits, a sign of future construction, rose 6.9%
to a 1.54 million rate. That’s the highest level since
October 2022.
Builder confidence in September fell to the lowest level in
five months, according to the National Association of
Home Builders. Home builders are increasingly offering
incentives, including cutting prices.
"August's home construction data appear to be showing
some cracks in the armor of what has been one of the few
strong indicators in the housing market recently," said
Daniel Vielhaber, an economist at Nationwide. "Still, it's
important to note that there could be a noise component
here as much of the sharp decline in starts came from the
multifamily sector, which is notoriously volatile."
Canadian housing starts fell 1% in August compared with
the previous month as groundbreaking decreased on
multiple-unit projects.
The seasonally adjusted annualized rate of housing starts
fell to 252,787 units from a revised 255,232 units in July,
the Canadian Mortgage and Housing Corporation
(CMHC) said. Economists had expected starts to fall to
247,100.
US existing home sales fall in August, prices continue
to rise
US existing home sales unexpectedly fell in August as
persistently tight supply boosted prices, and a further
decline is likely amid a resurgence in mortgage interest
rates.
Existing home sales slid 0.7% from July to a seasonally
adjusted annual rate of 4.04 million in August. Year-over-
year, sales fell 15.3% (down from 4.77 million in August
2022), the National Association of Realtors reported.
"Home sales have been stable for several months, neither
rising nor falling in any meaningful way," said NAR Chief
Economist Lawrence Yun. "Mortgage rate changes will
have a big impact over the short run, while job gains will
have a steady, positive impact over the long run.”
At an annual rate of 480,000 in August, existing-home
sales in the Northeast were unchanged from July but down
22.6% from August 2022. In the Midwest, existing-home
sales increased by 1.0% from the previous month to an
annual rate of 970,000 in August, down 16.4% from the
prior year.
Existing-home sales in the South fell 1.1% from July to an
annual rate of 1.84 million in August, a decrease of 12.4%
from one year ago. In the West, existing-home sales
slumped 2.6% from the previous month to an annual rate
of 750,000 in August, down 15.7% from the prior year.
The median existing-home price for all housing types in
August was $407,100, an increase of 3.9% from August
2022 ($391,700). All four US regions posted price
increases.
"Home prices continue to march higher despite lower
home sales," Yun said. "Supply needs to essentially double
to moderate home price gains."
See:
https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
US job market remains resilient
US employers added 187,000 jobs in August, evidence of
a slowing but still-resilient labor market despite the high
interest rates the Federal Reserve has imposed.
Last month's job growth marked an increase from July's
revised gain of 157,000 but still pointed to a moderating
pace of hiring compared with the sizzling gains of last
year and earlier this year. From June through August, the
economy added 449,000 jobs, the lowest three-month total
in three years. In addition, the government revised down
the gains for June and July by a combined 110,000.
The latest jobs report from the U.S. Department of Labor
also showed that wage gains are easing, a trend that may
help provide reassurance that inflation pressures are
cooling.
Among sectors of the economy, by far the biggest hiring
gain last month—97,000—came in the health care
industry, which does not depend on the rise and fall of the
economy. Construction companies added 22,000, while
manufacturing saw little change.
Taken as a whole, some economists saw the report as
reflecting an economy that is returning to its pre-COVID
state, before the pandemic recession struck in 2020,
followed by an explosive economic recovery.
See:
https://abcnews.go.com/US/wireStory/us-jobs-report-august-point-moderating-pace-hiring-102852733
US consumer sentiment edges downward
US consumer sentiment edged lower for a second straight
month in September, but their economic outlook
brightened modestly as household expectations for near-
term inflation fell to the lowest in more than a year, the
latest consumer survey from the University of Michigan
showed.
The preliminary reading of the survey’s Consumer
Sentiment Index dropped to 67.7 this month from a final
reading of 69.5 in August. That was below the median
forecast of 69.1 among economists polled by Reuters. The
survey's barometer of current economic conditions fell, but
its gauge of consumer expectations edged higher.
"Both short-run and long-run expectations for economic
conditions improved modestly this month, though on net
consumers remain relatively tentative about the trajectory
of the economy," survey director Joanne Hsu said in a
statement.
See:
http://www.sca.isr.umich.edu/
US manufacturing continues to slide
Economic activity in the manufacturing sector contracted
in August for the 10th consecutive month following a 28-
month period of growth, say the nation's supply executives
in the latest Manufacturing ISM Report On Business.
After showing some growth in recent months, the
Furniture & Related Products sector reported contraction
in August, along with 12 other industries among the 18
surveyed by ISM. The Wood Products sector also reported
contraction in August.
"(The Federal Reserve's) actions to increase borrowing
costs has dampened demand for residential investment.
Recently, this slowdown plateaued somewhat, with
demand stabilizing,” reported one Wood Products
executive in the Survey. “The outlook for 2024 remains
uncertain, and we continue to be cautious about building
inventories."
See:https://www.morningstar.com/news/pr-newswire/20230901la95754/manufacturing-pmi-at-476-august-2023-manufacturing-ism-report-on-business
Furniture buyers avoiding big ticket items
Furniture sales are descending from pandemic-era highs as
consumers are no longer looking for expensive items for
home offices and newly purchased houses.
Earlier this month, Home Depot said furniture sales fell
5.5% in the most recent quarter compared to the same
quarter in 2022. Bassett Furniture reported a second
quarter sales drop of 26% compared to the same quarter in
2022. Luxury furniture maker RH reported a 19% drop in
second quarter sales compared to the previous year.
Hooker Furnishings, which sells furniture at department
stores like Macy’s, reported an even bigger year-over-year
second quarter sales drop of 36%. In August, two major
sellers, Williams-Sonoma and La-Z-Boy, reported second
quarter drops of 20%.
And furniture chain Mitchell Gold + Bob Williams
announced early this month that it would shut down.
Officials at those companies attributed the decline to a
shift in spending associated with the end of pandemic-era
home improvement spending.
“We’re in a period where consumers are buying fewer
large-ticket furniture pieces than they did a year ago as
they shift their spending,” Williams-Sonoma CEO Laura
Alber said on a conference call with investors, according
to CNN.
“We continue to expect the luxury housing market and
broader economy to remain challenging throughout fiscal
2023 and into next year as mortgage rates continue to
trend at 20-year highs,” said Restoration Hardware CEO
Gary Friedman.
See:https://themessenger.com/business/furniture-sellers-report-sales-declines-as-customers-eschew-big-ticket-items
“Serene” is what’s trending in flooring fashion
For flooring in 2023-2024, it is serene and simple designs,
along with lighter colorations, that is trending according to
suppliers interviewed by Floor Covering Weekly.
Emily Finkel, vice president of residential design at
Engineered Floors, expects an increased use of polished,
simple, and seamless flooring that exudes elegance and
simplicity in 2023-2024. “Whether used in industrial-
inspired lofts or sleek modern homes, this trend allows for
clean lines, neutral tones and a seamless integration with
various design styles,” Finkel explained.
A recent trend that encompasses all flooring categories
from hardwood to carpet is lighter colorations. According
to Jason Randolph, senior vice president of sales,
Karastan, “We are seeing white, cream and beige in
carpets and lighter greys, taupes and even natural shades
in hardwood, laminate and LVT. This trend started in the
coastal areas and has continued to move across all
markets.”
In hardwood and wood visuals, Liz Crow, director of
product design at Shaw Industries anticipates a soft return
to traditionalism. “This will bring acceptance of more
character and individuality back to wood,” said Crow.
“With such a push for clean visuals saturating the market,
we are taking steps toward the next version of that, a
warmer inviting wood style with some character and
personality. More knots and marks than what clean design
offers.”
See:
https://www.floorcoveringweekly.com/main/features/floor-fashion-trends-to-serene-41702
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