Overview
Economic indicators released this week were mixed. Retail sales saw some modest strength in December while industrial production barely budged during the month.
Housing starts declined, and sales of existing homes in 2023 were the lowest since 1995. The housing market did see some positive news as mortgage rates fell to their lowest level since May. However, tight inventories and high prices will remain a challenge for the market.
Retail and food service sales
Retail and food service sales increased 0.6% m/m, seasonally adjusted, in December and were up 5.6% y/y, according to current-dollar data released by the Census Bureau. Adjusted for inflation, sales ticked up 0.2% and were up 2.2% y/y, according to the St. Louis Federal Reserve.
Changes m/m in specific retail sectors varied notably. Sectors posting gains of more than 1% included department stores and the broader category of general merchandise; nonstore retail; clothing and clothing accessories; and motor vehicle and parts dealers. Sectors seeing declines of 1% or more include health and personal care stores; gasoline stations; and furniture and home furnishings stores.
Sales of existing homes
The 4.09 million existing homes sold in 2023 was the fewest since 1995, the National Association of Realtors said Friday. Total existing-home sales declined 1.0% m/m in December, while sales of existing single-family homes were down 0.3%. Sales of existing single-family homes were down 6.1% y/y in December.
While sales were at a 28-year low, prices were at an all-time high. The median price of $389,800 in 2023 was a record.
In releasing the data, NAR said that the latest month’s sales likely will be the bottom before turning higher in 2024 due to “meaningfully lower” mortgage rates and an expected increase in inventory of homes on the market.
Although sales of single-family homes were slightly lower m/m in December, the inventory of homes on the market fell 13% to the lowest level since March. The result was a decrease in the inventory of homes on the market relative to the sales rate. The inventory fell to 3.1 months from 3.5 months in November. The December inventory was the leanest since May of last year.
Meanwhile, affordability is improving gradually. In addition to lower mortgage rates, the median price of an existing-family home sold declined for the sixth straight month to $387,000. However, the median price is still 4% higher than it was a year earlier and nearly 42% higher than the median price of a home sold during February 2020.
Trucking
Broker-posted rates for van equipment in the Truckstop system continued to fall after the holiday surge during the week ended January 12 (week 2), but total market rates moved higher due to the largest increase in flatbed spot rates since March 2022. Flatbed rates were highest since late September.
Despite steady declines over the past two weeks, dry van rates are still about 3 cents higher than they were during the week before Christmas while refrigerated rates are 20 cents higher.
The total broker-posted rate increased more than 2 cents after falling more than 7 cents during the prior week. Although spot rates are 5 cents below where they were during the final week of 2023, they otherwise were the highest since the week that included Labor Day. Rates were nearly 8% below the same 2023 week and more than 5% below the five-year average.
Total load activity rose 21.7% after surging nearly 52% following the holidays. Total volume was down about 13% compared to the same 2023 week and was about 28% below the five-year average.
For more on week 2 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal volume
Winter weather appeared to take a bite out of rail traffic during the latest week, although both rail carload and intermodal volume increased week over week. With widespread winter weather continuing for much of this week, rail volume likely continued to be stressed.
North American rail carload volume advanced 3.2% sequentially during the week ended January, but carloads were down 9.1% y/y. Economically sensitive freight was stronger week over week, rising 9.4%, but it was down 3.7% y/y.
Rail carload commodities seeing double-digit de-clines sequentially were primary forest products, non -metallic minerals, and coke. The strongest increase came in motor vehicles and equipment, which saw rail carloadings jump more than 44% from the prior week. Even so, vehicles and equipment loadings were down 5.4% y/y.
Other commodities seeing strong gains week over week include metal scrap, lumber and wood products, farm products, and crushed stone, sand, and gravel.
