The end of the year saw housing starts fall short of expectations. Meanwhile, consumer spending skyrocketed heading into the holiday season.
After November surpassed October’s 30-year inflation high, the Fed planned to expedite its timeline for tapering bond purchasing. Finally, analysts expect to see plenty of volatility in mortgage markets towards the end of December as trading activity normally declines.
Housing Starts Fall Short
While limited home inventory continues to plague the country, analysts witnessed housing starts fall short. Overall, the limited housing inventory increases important in the report on housing starts. However, the latest results came in mixed.
In October 2021, overall housing starts fell short of expectations with a modest decline from September 2021. Single-family housing starts fell 4% from the prior month to the lowest level since August 2020. On the other hand, multi-family housing starts rose 7%.
Optimistically, building permits posted solid gains for both single-family and multi-family units. Building permits represent a leading indicator of new real estate construction. Rising prices and shortages for materials, land, and skilled labor continued to present challenges to builders.
Consumer Spending Jumps
Aside from housing starts falling short, consumer spending accounts for over two-thirds of United States economic activity. Therefore, the retail sales data dictates growth.
In October 2021, retail sales jumped 1.7% from September of this year. In conclusion, retail sales soared above the consensus forecast and an impressive 16% higher than a year ago. The electronics and appliances sectors showcased particular strength. With the holiday season on the horizon, consumers showed few signs of slowing down spending.
The Path Ahead After Housing Starts Fall Short
After housing starts fell short, the real estate market shifted to end-of-the-year closings. In addition, Zillow predicts that home prices soar in 2022. With limited housing inventory and an increasing supply of first-time home buyers, the housing market set itself up for stiff competition.
Regarding consumer spending, the holiday season tends see an uptick in this department. However, the rapidly rising inflation influenced many consumers to take care of their spending earlier. Next month, we’ll see whether this trend persists.
For further information on falling housing starts, get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
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