Economic Snapshot: Healthy year-over-year improvements amid monthly declines

Housing starts, builder confidence and the consumer price index may have declined this month, but it’s important to keep in mind that housing starts are starting to show consistency in monthly starts above 1 million and the CPI is well above last year’s index. Builder confidence is still above 50, which means more builders than not view conditions favorably.

Housing starts 

Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,028,000, 1.6 percent below the revised October estimate of 1,045,000 and 7.0 percent below the previous year. Single-family housing starts were at a rate of 677,000, which is 5.4 percent below the revised October figure of 716,000.

Most regions saw an increase in housing starts in November. In the Northeast, housing starts saw an increase of 8.7 percent and are up 17.7 percent year-over-year. The rates in the West are even higher, with housing starts climbing 24.1 percent in November and 28.1 percent from 2013. While housing starts in the Midwest saw an increase of 14.4 percent the month, they are still 15.3 percent below the previous year. The South is seeing the hardest hit, reporting housing starts at 19.5 percent below the previous month and 20.2 percent below 2013.

Housing starts this month were below expectations of 1.038 million, however October’s reading was revised upward at a rate of 36,000. November marks the third consecutive month of starts above 1 million, which indicates slow recovery in the housing market.

Housing market index 

The National Association of Home Builders reported the housing market index dropped one point from 58 to 57 in December.

This dip was due to slight losses in two of the three HMI components. The index gauging current sales conditions and the index measuring expectations for future sales both fell one point, to 61 and 65, respectively. The index gauging traffic of prospective buyers remained steady at 45.

Three-month averages for regional HMI scores rose four points in the West to 62 and one point in the Northeast to 45. The Midwest fell three points to 54 and the South dropped two points to 60.

It should be mentioned that any reading above 50 indicates more builders view sales conditions as good rather than poor.

Consumer price index 

The Consumer Price Index declined 0.3 percent in November but is 1.3 percent above the previous year. The gasoline index contributed heavily to the decrease, posting its sharpest decline in six years at 6.6 percent this month, falling 10.5 percent from November 2013. The energy index also fell 3.8 percent and is down 4.8 percent over last year.

November did see a number of increases, however. The index for all items less food and energy increased 0.1 percent in November and is 1.7 percent higher over the previous year. The shelter index and transportation services index both rose 0.3 percent and medical care services rose 0.4 percent.

Though the index for new vehicles declined 0.1 percent this month, it is 0.6 percent above the previous year. The index for recreation declined 0.2 percent and is down over the past 12 months.