Tags: housing | market | faltering | signs

Signs Keep Mounting That Housing Market Is Faltering

toy brick house atop series of building blocks about to fall
(Flynt/Dreamstime)

By
Wednesday, 17 October 2018 01:32 PM Current | Bio | Archive

INDICATOR: September Housing Starts and Permits

KEY DATA: Starts: -5.3%; 1-Family: -0.9%; Permits: -0.6%; 1-Family: +2.9%

IN A NUTSHELL: “The signs keep mounting that the housing market is faltering.”

WHAT IT MEANS: Another day of housing numbers and another indication that the housing activity is moderating. Housing starts fell sharply in September and the decline is worse than it appears because the September level was revised downward from the initial estimate. That said, the headline number needs to be discounted somewhat as there was a sharp drop in activity in the South. Hurricane Florence probably restrained activity and it may be a while before the flip side of that, the rebuilding kicks in. On the other hand, activity in the Northeast really picked up, rising by 29%. All of that was from multi-family building, which is notoriously volatile. Single-family starts were down in this region. Looking forward, while permit requests eased, they rose for single-family homes. That implies we could see an increase in construction in the next couple of months. That possibility is supported by an increase in the National Association of Home Builders index, which was released yesterday. Rising traffic drove the small gain.

MARKETS AND FED POLICY IMPLICATIONS: Round and round the markets go, where they will stop, no one knows. Having fun trying to figure out the markets? I doubt it. Down big one day, up huge a few days later. And it isn’t as if there was a major event to trigger the volatility. There have been a slew of warning signs and the housing data are some of them. But where we go from here is anyone’s guess. If I knew, I would be sitting on the beach, which I am not doing. If you are reading my commentaries, you know I am worried about a year from now. But even if I am right about the gathering storm clouds, it doesn’t explain why the markets are so crazy right now. My only explanation is that the economic Kool Aid Acid Test is wearing off and people are bailing on the bus. Reality about the future is slowly starting to settle in. (For those of you confused, read Tom Wolfe. For those of you who are sixties people, my apologies.) In any event, the Fed will do what it is mandated to do, which is strive for full employment and stable prices. It will not do what it is not mandated to do, which is maximize stock returns, no matter how much investors, commentators and politicians protest.

Joel L. Naroff is the president and founder of Naroff Economic Advisors, a strategic economic consulting firm.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
JoelNaroff
In any event, the Fed will do what it is mandated to do, which is strive for full employment and stable prices. It will not do what it is not mandated to do, which is maximize stock returns, no matter how much investors, commentators and politicians protest.
housing, market, faltering, signs
440
2018-32-17
Wednesday, 17 October 2018 01:32 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved