Harsh February weather across the nation weighed on consumer spending but March could see a big rebound now that stimulus checks have begun to hit the accounts of many Americans. February Retail Sales fell by 3% versus the decline of 0.6% expected while January was revised higher to a gain of 7.6% from 5.3%. On a year over year basis, Retail Sales were up a solid 6.3%. Consumer spending comprises 70% of U.S. GDP and is vital to economic growth.
Home builder sentiment slipped in March from February as builders cited rising material costs as one of the factors for the decline. The NAHB Housing Market Index fell to 82 this month from 84 last month. The index was 72 in March 2020 and hit 90 in November 2020. Any number over 50 indicates that more builders view conditions as good than poor. Lumber prices have gone from $300 in March 2020 to $1,000 in mid-February to the current level of $861. That meteoric rise has slapped $24,000 to the price of a new home.
The MBA reports that its Builder Application Survey showed that mortgage applications to purchase new homes fell 9% in February from January and is of the same theme from home builders. The rising cost of materials and a low inventory of lots to build on stunted new home purchase applications last month. Annually, applications were up 9.2%. The average loan size rose to a record of just over $370,000.