top of page

Retail Sales and Housing Activity Surge

Overview: Over the past week, investors continued to keep a close eye on the concerning spread of the coronavirus in many areas. The major economic data exceeded expectations, but mortgage rates held steady, close to record-low levels.


Consumer spending accounts for about 70% of all economic activity in the U.S. As such, the retail sales data is a key indicator of current financial conditions. After falling sharply in March and April due to the economic impact of the pandemic, a rapid rebound has been taking place. In June, retail sales increased 7.5% from May, which was well above the consensus forecast, and strength was seen in a wide range of categories.

The housing market also has been recovering more quickly than expected. In June, existing-home sales jumped 21% from May but still were not as strong as the same time last year. Total inventory of existing homes available for sale was 18% lower than a year ago, while the median existing-home price was 3.5% higher.

In June, housing starts surged 17% from May, and building permits, a leading indicator of future construction, rose modestly. The National Association of Home Builders (NAHB) housing index showed that homebuilder confidence shot up from 58 to 72, which was far above the consensus forecast. Since a lack of inventory has been holding back home sales in many regions, this news was very encouraging.

Thursday’s European Central Bank (ECB) meeting revealed no policy changes. ECB officials expect rates to remain at their “present or lower” levels until they see the outlook for inflation rise to their target level of 2%. They also project that European economic growth will decline by 8%-10% this year. Separately, European Union officials reached agreement on Tuesday on a new 750 billion euro ($857 billion) fiscal stimulus relief package to help boost economies hurt by the pandemic.


Retail Sales (% change)

Week Ahead

July 24 — New Home Sales report

July 29 — Federal Reserve meeting

July 30 — Second-quarter gross domestic product (GDP)

bottom of page