While there are reasons to worry about unconvincing retail sales and perhaps a recessionary manufacturing sector, recent figures from the housing sector were quite upbeat.
It began with a better than expected existing home sales release, which showed an annualized level of 5.46 million, above 5.2 expected in December. The double feature publication of building permits and housing starts was mixed, but we then had house prices rising more than expected at 5.8% y/y – strong growth but nothing resembling a bubble, at least not on the national level.
Last but not least, new home sales beat with 544K, more than 501K predicted and better than 491K last time. Sales of new homes are of importance as they trigger a wide range of economic activity. In general, activity in the housing sector is highly correlated with the performance of the wider economy.
So, while stock markets may be capped by the lack of Fed support (as this chart shows), and fears about a recession begin to creep in (due to external factors as well), at least this indicator of health of the US economy is looking good: nothing spectacular and bubbly nor poor and worrying. Just more steady growth.
Will this impact the Fed in some way? Interest rates are critical for this sector. We will soon know:
