Elgin Area Chamber Of Commerce: Retail Sales Beat Expectations, Homebuilder Confidence Falls, Single-Family Rentals Set Record

Press release from the Elgin Area Chamber of Commerce:

February 17, 2022

Retail Sales Beat Expectations

Retail sales posted a gain in January that was stronger than expected despite rising inflation, a positive indicator for brick-and-mortar real estate.

The Commerce Department reported that sales increased 3.8% from December, exceeding the 2.1% that was expected. The increase more than made up for the 2.5% decline in December, a number revised lower from the initial report of 1.9%.

January’s sales were 13% higher than January 2021. Gus Faucher, chief economist with PNC Financial Services, told Yahoo Finance that some of the increase reflects higher inflation “but a lot more of it is due to higher volumes.”

Furniture sales were a big driver with a 7.2% gain after declining 7.4% in December. Online sales rebounded 14.5% compared to an 11.4% drop in December.

Department store sales that had fallen 7% in December rose 9.2% in January.

Sales at gas stations fell 1.7% in January to temper total sales growth. They still are 33.4% higher than a year earlier before people started returning to the office and gas prices were lower.

Homebuilder Confidence Falls

Supply chain challenges sent homebuilder confidence down for the second consecutive month.

The National Association of Home Builders index with Wells Fargo fell a point to 82 in February. That’s 2 points lower than a year ago.

Confidence eased as demand for new homes remains strong. Builders, though, are having difficulties with completing homes quickly enough to meet the demand.

“Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops and appliances,” said Jerry Konter, NAHB’s chairman and custom homebuilder in Savannah, Georgia, in the statement.

Konter said supply delays are driving up construction costs, which translates into higher prices for houses that keep some possible buyers out of the market.

“Residential construction costs are up 21% on a year-over-year basis, and these higher development costs have hit first-time buyers particularly hard,” Robert Dietz, the association’s chief economist, said in the same statement.

Single-Family Rentals Set Record

Investors scooped up single-family homes at record pace in the fourth quarter, according to an industry report.

The top areas for an increasing number of purchases by investors: Atlanta; Charlotte, North Carolina; and Jacksonville, Florida.

Real estate brokerage firm Redfin culled data to find that investors bought 18.4% of U.S. homes in the final three months of 2021, the highest since the firm started tracking the data in 2000.

Investors bought 80,293 homes, paying nearly $50 billion in all. The number of homes bought was lower than the peak in the third quarter when investors bought 88,288 homes but the share was higher.

Source: www.CoStar.com

This press release was produced by the Elgin Area Chamber of Commerce. The views expressed here are the author’s own.