
Kevin Mason
The headline numbers coming out of the US continue to point to a robust economy, but the K-shaped bifurcation between income brackets is undeniable. The steady decline (and recent collapse) in real disposable income is concerning. There are many factors that contribute to an individual’s disposable income. Rising energy costs have been a big factor of late (gas prices predominantly), but disposable income was in decline far before its recent dip into negative territory. Inflation has outstripped wage growth in many parts of the private sector, with households often having to tap into savings and/or take on debt to support spending. Another challenge has been high interest rates, and that shows up in the housing market (as well as autos).
…After showing impressive resilience through the first four months of the year, US housing starts capitulated in May, slumping to a seasonally adjusted 1.18MM units (their lowest level since May 2020 at the onset of the pandemic). Single-family starts came in at 882,000, off by 2% m/m and 7% y/y, while multifamily activity was off by a whopping 40% m/m and 14% y/y at just 295,000. That adjusted multifamily number was the lowest reading since November 2024 and came as a shock after multis had decisively outperformed singles through the first four months of the year (averaging an adjusted 478,000 over that period). …To round off a dismal month, home sales data for May gave little reason for optimism. Looking first at new home sales, May’s total of 580,000 (adjusted) was off 7% both m/m and y/y.