Pondering Yesterday’s Gigantic Miss On Construction Spending

Authored by Mike Shedlock via MishTalk,

Yesterday’s Oct construction spending report was much weaker than expected. That’s on top of huge negative revisions for Sept.

Gigantic Miss

Economists at Econoday expected construction spending to rise 0.4% in October. Instead, spending fell 0.8%.

Worse yet, the Census Department revised september spending from 0.5% to -0.3%.

All told that is a gigantic economic estimate miss of a full 2.0 percentage points.

Residential Construction

Despite glowing new home sales reports, residential construction spending peaked in February of 2018.

Government spending has kept total construction spending flat.

If this was a single report, I would suspect an outlier. But the key chart lines point to early 2018.

New Home Sales Highest in 12 Years

Six days ago I reported New Home Sales Highest in 12 Years.

Q: Does today’s report make sense?

A: Actually, it does.

Median Sales Price of Houses Sold for the United States

The median home sales price peaked in the fourth quarter of 2017.

Builders are building cheaper homes because no one can afford anything else.