Housing – E-commerce Sales Growth

Let’s go over e-commerce sales before getting into housing starts. Q3 e-commerce sales growth was only 3.1% on a quarter over quarter annualized basis. That fell from 3.6% in Q2. Q2’s growth rate was revised down from 3.9%. This is in tune with the October retail sales report which shows e-commerce growth slowed.

It’s still way ahead of overall retail sales. Q3 retail sales were up 0.9%. E-commerce sales as a percentage of total sales was up 0.2% to 9.8%.

Firms like Target are investing heavily into online sales with same day delivery. It’s not a surprise to see e-commerce sales growth slowing. It will slow in relation to overall growth as it increases its share.

Cyber Monday should still be great though.

As you can see from the chart below, the retail survey this Wednesday before Thanksgiving is stronger than last year. This holiday season will be the last strong one of this cycle. The labor market won’t be as strong in 2019. The Redbook same store sales report showed growth of 6.2% in the week of November 17th. That is up from 6.1% growth in the prior week.

Target’s CEO is telling the truth when he says the consumer is strong. The problem is many headwinds will change that in the next year.

Housing – Weak Housing Starts

The housing market has been weakening for the past few months. So it’s no surprise that housing starts missed estimates.

They came in at 1.228 million in October which missed estimates for 1.24 million. The September starts were revised from 1.201 million to 1.210 million. This month can be compared to last month because the data is seasonally adjusted.

Good news is housing permits beat estimates as they were 1.263 million which beat the consensus of 1.26 million. September results were also revised higher from 1.241 million to 1.270 million. That means permits fell 0.6% from September.

It’s important to recognize this report in comparison to the housing market index isn’t apples to apples. This is from October and the HMI was from November.