515 viewsGregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
Today we have the latest on consumer spending, and the housing market.
Retail Sales Rose Less than Expected in June
Retail sales increased 0.2% last month, below the 0.5% gain Wall Street was expecting. Sales in June were 1.5% higher than a year ago. This is another report that can be either good or bad news depending on how you look at it.
The optimist would point out:
- Retail sales have risen in each of the past three months.
- While small, a 0.2% increase is still an increase.
- Since consumer spending is roughly 70% of GDP, a recession this year is highly unlikely.
Now for the pessimist:
- Retail sales are not adjusted for inflation.
- While sales are up 1.5% since June 2022, prices rose 3.0% during that time, meaning consumers continue to pay more for less.
- It’s also concerning that the growth in spending has been so anemic at a time when the unemployment rate has remained under 4%.
I say we should be happy sales are still rising, as it means a recession isn’t knocking on our door yet. The decline in inflation over the past year has been dramatic, and wages are finally rising faster than prices. That bodes well for spending in the months to come.
Existing Home Sales Down 3.3% in June
The U.S. housing market remained sluggish last month, as the supply of existing homes for sale remains very low. Sales of pre-owned homes fell 3.3% from May, and 18.9% from June 2022. Ouch.
NAR’s chief economist Lawrence Yun summed the market up perfectly, "There are simply not enough homes for sale."
Just how low is the supply of homes for sale? Inventory at the end of June was 13.6% lower than a year ago, at 1.08 million. That’s a 3.1-month supply based on the current pace of sales. A six-month supply is considered a balanced market, so you can see how tight things are. The low supply pushed the median price of an existing home up to $410,200, the second higher price ever recorded by NAR.
It’s my job to remind you that while nationally there is a shortage of homes for sale, that’s not necessarily the case in every market. Our latest inventory report for Manhattan shows an 8.3-month supply of apartments for sale at the beginning of July, much higher than the 3.1 month national average. So remember what us real estate people always say, "all real estate is local."