New Single-Family Home Sales Decline in January, Manufacturing Survey Index Falls

According to the National Association of Manufacturers’ (NAM) Monday Economic Report for this week, new single-family home sales declined 4.5% from an annualized rate of 839K units in December, the strongest pace in nine months, to 801K units in January. Sales fell in every region except the West. Despite the easing, new home sales have trended higher since October, when 667K units marked the slowest rate since April 2020.
Affordability issues, supply chain problems and workforce shortages continued to challenge the housing market over the past year. Single-family home sales have fallen 19.3% over the past 12 months, down from 993K units in January 2021, which was the strongest reading since December 2006.

Manufacturing activity in the Richmond Federal Reserve Bank’s district slowed in February to the slowest pace since September. The composite index of general business activity declined from 8 in January to 1 in February (values less than zero indicate contraction). New orders, shipments and capacity utilization contracted for the month; however, employment and capital expenditures both accelerated with firms continuing to invest strongly in themselves.

Companies continued to be challenged by supplier issues, as indicated by reduced inventories and long vendor lead times. Inflation remained a significant challenge as costs for raw materials soared 12.3% in February. Firms reported that the prices received for their goods and services increased 8.8% in February, down from 11.3% in January. Respondents anticipate an annualized 5.5% increase in costs six months from now, down from 5.8% in the prior release. Manufacturers in the district expect prices received will increase 4.9%, which is below the 6.0% predicted in the January report.