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By New_Deal_democrat May 3, 2017 8:43 am
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Housing and cars: update for April
It's time for a monthly update on houses, and let's take a little look at vehicle sales as well.  If there is going to be a consumer downturn, generally the first thing that gets turns down is housing, over a year before the actual downturn, and then car sales, about 6 to 9 months before the downturn.

The story on housing through the first quarter of the year was surprisingly good. Interest rates didn't cause a pullback at all.  In Permits for single family homes -- the least volatile of the most leading metrics -- had the highest 3 month rolling average of any time in over 9 years. March was less than 0.5% off December's high water mark (red in the graph below):


The *other* least volatile, but somewhat less leading, metric is private residential construction (blue in the graph above) and true to form that has followed permits higher.  

The more volatile overall permits number has been generally flat for the last six months, as multi-family construction lags.  Similarly, the quarter over quarter comparison for starts (which are even more volatile on a monthly basis) has also been flat, although the 3-month rolling average made its post recession high in February. Meanwhile, the even more volatile - but slightly more leading - new home sales (green) trended higher in the first quarter:

Finally, although these aren't nearly so important to the economy, the much larger amount of existing home sales has also been trending high, and just made its latest expansion high this month:


One thing is nearly certain, and that is, unless housing actually turns down, the consumer is simply not rolling over, and no recession is near.

Turning to motor vehicle sales, these too are somewhat volatile on a month over month basis.  They tend to have long plateaus during expansions. For example, during the 2000s expansion, sales were between 16.5 and 18.5 for several years before tailing off under 16.5 in the 6 months before the 2008 recession (note this graph does not include April):

We've had a similar plateau in this expansion.  Yes, March and to a lesser extent April represent a downdraft (just as we briefly had one year ago).   But for me to be concerned, I would have to see vehicle sales fall under 16.0 million in a month, or at least under 16.5 for several months in a row. We had 16.7 million annualized in April, just reported yesterday (h/t Calculated Risk):

So the overall story is late cycle flatness, but no downturn yet.

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