---
title: "Monday Update: Housing Slowdown Moderates"
description: Is the housing slowdown starting to moderate? Commonwealth CIO Brad McMillan says this sector of the economy bears watching as a warning sign for future growth.
---

[The Independent Market Observer | Outlook. Opinion. Insight.](https://blog.commonwealth.com/independent-market-observer)

# [Monday Update: Housing Slowdown Moderates](https://blog.commonwealth.com/independent-market-observer/monday-update-housing-slowdown-moderates)

 Written by [Brad McMillan, CFA®, CFP®](https://blog.commonwealth.com/independent-market-observer/author/brad-mcmillan-cfa-caia-mai) | Sep 24, 2018 5:17:20 PM

Last week’s economic data was all about housing, but the week ahead will be a busy one. It will give us a solid look at the consumer’s thoughts and actions, as well as business activity and housing data.

##### Last week’s news

On Tuesday, the **National Association of Home Builders survey** came in better than expected. It remained steady at 67 for August and beat the expected 66. This slight outperformance likely came from dropping lumber prices and an increase in permits, which offset continued labor shortages and slowing housing demand. That said, this survey remains at the lowest level in a year and has shown declining confidence for several months in a row. The pause, while helpful, does not necessarily signal a rebound.

On a more encouraging note, the **housing starts report**, released on Wednesday, had a significant bounce. It rose from 1.168 million in July to 1.282 million (annualized) in August, which was well above expectations. Unfortunately, the underlying trend looks weaker. Much of the bounce came from the volatile multifamily sector, as single-family starts rose by much less. Building permits were also down, to the lowest level in 15 months. As with the home builder survey, with the housing market constrained by rising supply and weakening demand, this month’s positive surprise likely does not signal a change in the downward trend.

Finally, on Thursday, the **existing home sales report** underperformed. Sales stayed steady at 5.34 million for August, the same as in July. This result was below expectations and leaves new home sales below the levels of the first half of the year. Still, this is the first time in five months that sales did not decline, which suggests the market may be stabilizing.

Overall, while the housing market decline looks to be moderating, the data shows that housing continues to slow from the first part of the year. As a leading sector of the economy, this is a warning sign for future growth.

##### What to look forward to

On Tuesday, the **Conference Board consumer confidence survey** will be released. It is expected to pull back slightly, from 133.4 to 131.5. This result would still leave the index at a multiyear high and would signal continued spending growth. If the number comes in as expected, it will be positive for the economy.

On Wednesday, the **new home sales report** is expected to tick up slightly—from 627,000 to 631,000—continuing a gradual recovery from an earlier slowdown. If the number comes in as expected, it will signal that while housing growth continues to slow, it remains at healthy levels overall.

Also on Wednesday, the **Fed meeting** concludes. Markets expect the Fed to raise interest rates by 25 basis points on continued growth and rising inflation. The announcement will be followed by a press conference, which markets will be watching closely for hints of how the Fed sees future rate increases playing out. This rate increase is expected, so it should have minimal impact.

On Thursday, the headline index of the **durable goods orders report** is expected to bounce significantly. It should go from a 1.7-percent decline in July to a 1.7-percent increase in August, on a rise in airplane orders. As these numbers suggest, the headline index is notoriously volatile. The core index, which excludes transportation and is a much better economic indicator, is expected to improve from 0.1-percent growth in July to 0.4-percent growth in August, on growing capacity constraints in many businesses. This again would be a healthy level of growth.

On Friday, the **personal income and spending report** is expected to show that personal income rose by 0.4 percent in August, up from 0.3 percent in July, on continued strong job growth and faster wage growth. There may be some upside risk here. Personal spending is expected to fall from 0.4 percent in July to 0.3 percent in August, as retail sales surveys showed modest growth and auto sales declined. Despite the decline, this would remain a healthy level of spending growth and would be well supported by income growth.

Have a great week!

[View full post](https://blog.commonwealth.com/independent-market-observer/monday-update-housing-slowdown-moderates)

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