Markets began their Thursday with an array of economic indicators to help them digest the first Fed hike they've had to swallow in over three years.
Starting with the woebegone housing market, groundbreaking on new American homes USHST=ECI slid 2.6% in August to 1.275 million units at a seasonally adjusted annual rate (SAAR), according to the Commerce Department.
That's 2.6% weaker than the 1.309 million units SAAR analysts were expecting, and extends July's 9.0% drop.
But a peek below the foundation shows single-family projects—which account for the lion's share of the total—actually increased by 7.6%. The volatile multiple-unit segment can be blamed for the overall decline, by plunging 21.7%.
As for building permits USBPE=ECI—considered one of the housing market's more forward-looking indicators—they fell by 2.7% to 1.394 million units SAAR, or 1.1% short of consensus.
Here, permits for single-family projects declined by 1.8% and the multiple-unit segment dipped 4.3%.
"Home builders are seeing demand evaporate this year as 30-year mortgage rates approach 7.0 percent again,” writes Ben Ayers, senior economist at Nationwide. “With the inventory of new homes for sale now at 9.6 months, many builders are having to increase incentives or cut prices to sell homes under current buying conditions."
"This compresses margins at a time when costs for inputs and labor continue to rise, a recipe for reduced start activity and slower housing completions ahead."
Sticking with the housing sector, signed contracts for the pending sales of pre-owned U.S. homes USNAR=ECI unexpectedly edged 0.3% higher last month, according to the National Association of Realtors (NAR). This was in defiance of the 0.6% decrease economists projected.
Even so, the increase marks a mere fractional rebound from July's downwardly revised 2.6% drop.
“Buyers steadily entered into contracts in August even though mortgage rates increased,” writes Lawrence Yun, NAR's chief economist. “However, the housing market is still sluggish, with contract signings below last year. This is due to higher mortgage rates offsetting the increased buying power created by job gains and income growth outpacing home price growth."
NAR's pending home sales index has been wallowing near the nadir that occurred directly after mandated COVID shutdowns ever since 30-year fixed mortgage rates crept above 6% over four years ago.
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