Lowest Existing Housing Inventory On Record

Redbook Same-Store Sales Growth Improves

The preliminary January consumer sentiment index from the University of Michigan was basically unchanged. As you can see from the chart below, the Bloomberg Consumer Comfort Index is at a 19 year high as it has increased with the stock market. Correlation with the S&P 500 is quite high. Low wage industries have high wage growth. And upper-income people have the rising stock market to make them optimistic.

(Click on image to enlarge)

The middle is being hurt by rising oil prices, although, that looks like it is changing. In the next couple of months, oil will have tough yearly comps. The energy in the CPI report will oddly have easy comps. The tiebreaker is the recent decline in oil prices. After peaking at $63.27, in part because of geopolitical strife, WTI has fallen to $55.24. Headline CPI should decline because of these lower prices. Keep in mind, the December PCE report doesn’t come out until next Friday.

This conversation all contextualizes the recent Redbook sales growth in the week of January 18th which rose to 5.3% from 5%. Sales growth has been strong in the first few weeks of January. It’s possible the 2-year growth stack in retail sales increases this month. Obviously, yearly growth will fall because the comp is harder. I will be paying special attention to motor vehicle and parts sales as they were weak in December.

An Update On Housing

This week, the FHFA housing price index, the MBA applications report, and the existing home sales reports came out. Let’s look at the 3. November FHFA house price index showed monthly growth of 0.2% which was the same as last month and missed estimates for 0.3%. Therefore, yearly growth fell from 5% to 4.9%. This goes against the recent trend of rising home price growth. I’m interested to see what the Case Shiller index shows next Tuesday. 

Remember, Redfin showed 6.9% yearly price growth in December which was the highest in 19 months. Each data point measures price growth differently so I look at how each one has done compared to its recent results. Existing home price growth was higher.

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