The pace of new residential housing construction slumped last month, dipping to 1.009 million units (annualized) in October — down nearly 3% from September’s total, the US Census Bureau reports. Newly issued building permits, on the other hand, perked up by nearly 5%, offering a brighter outlook for the near term. Yesterday’s encouraging update on the mood in the home building industry for November lends support for seeing today’s soft data on housing starts as a temporary affair. “Growing confidence among consumers is what’s fueling this optimism among builders,” said David Crowe, chief economist at the National Association of Home Builders (NAHB). Even so, the outlook for growth in housing generally remains modest at best, as implied by the ongoing deceleration in the year-over-year trends for both starts and permits.
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New York Fed President William Dudley is inclined to ignore the recent drop in inflation forecasts via the Treasury market. In a speech last week, he explained that “in assessing inflation expectations, I currently put more weight on survey-based measures of inflation expectations as opposed to market-based measures.” The distinction is more than academic. “Survey-based measures have been generally stable, consistent with inflation expectations remaining well-anchored,” he noted. Market-based estimates, however, tell a different story.
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