Auto Market Weekly Summary

Starts and existing home sales improved in July, jobless claims are increasing in August, and the Fed is getting closer to cutting rates again. Here is a roundup of key economic indicators that are driving our economy.

RESIDENTIAL CONSTRUCTION trends were mixed in July as permits declined and failed to meet expectations, but starts increased and exceeded expectations.

By the numbers: The seasonally adjusted annualized rate of starts increased 5.2% when a 1.8% decrease had been expected, and May starts were revised slightly higher. Permits decreased 2.8% when a 0.5% decrease was expected.

• Starts increased 9.9% in multifamily and increased 2.8% in single-family. After the July increase, total starts were up 12.9% year over year, while single-family starts were up 7.8% year over year, and multifamily starts were up 24.1%.
• Permits were down 7.9% year over year in single-family, while multifamily permits were down 1.4%. For the month, single-family permits were up 0.5% while multifamily permits decreased 8.2%.
• Permits lead starts, so the permitting pace at 1.354 million units was behind the 1.428 million starts pace, which indicates that starts should decrease in future months.
• In the underlying data, neither multifamily nor single-family permits are ahead of starts, but multifamily is relatively even, so we are likely to see more declines in single-family in future months.
• The multifamily permit pace was 484,000 compared to 489,000 for starts, and single-family had 870,000 permits vs. 939,000 starts.

Existing home sales increased 2.0% in July when a 0.3% decline was expected.

• The existing home sales SAAR of 4.01 million was up 0.8% from a year ago. 
• Home sales trends varied by region, with an increase of 8.7% in the Northeast, 2.2% in the South, and 1.4% in the West, but a decline of 1.1% in the Midwest. Compared to a year ago, sales were down in the West by 4.0% but were up in every other region. 
• Inventory increased 0.6% in July to the highest level since November 2019. The months’ supply of homes for sale decreased to 4.6 months, which was up from 4.0 months a year ago but is still considered tight. 
• The median sales price decreased to $422,400, which was up only 0.2% year over year. Prices were down year over year in the South and the West but up in the Northeast and Midwest.

SEASONALLY ADJUSTED INITIAL JOBLESS CLAIMS increased by 11,000 to 235,000 for the week ending August 16.

• That was 22,900 more than we saw in 2020 before the pandemic began, but 24,000 lower than the fall 2024 peak caused by the hurricanes. Non-seasonally adjusted initial claims decreased by 4,500 and were 50,000 lower than they were before the pandemic.
• Continuing claims, which represent people who previously filed and remain on traditional unemployment compensation, increased by 30,000 to 1.97 million as of August 9. That level of continuing claims was 219,000 more than it was before the pandemic and at the highest level since November 2021.
• The broadest measure of continuing claims decreased by 2,600 to 2.01 million in the latest data, which lags the traditional number and is not seasonally adjusted. That total measure is down 33,700 over the last 4 weeks and is 97,100 lower than the pre-pandemic level.
• Hiring has slowed, leaving more job losers on unemployment benefits for a longer time, but the initial claims numbers do not reflect a surge in layoffs.

FED CHAIR POWELL SPEECH: At the annual gathering at Jackson Hole today, Federal Reserve Chair Jerome Powell noted that the labor market was in a “curious kind of balance” caused by a slowing in hiring and in the growth of the labor force, but risks of a downside were rising.

However, Powell also acknowledged that “…upward pressure on prices from tariffs could spur a more lasting inflation dynamic.”

• Powell’s remarks were interpreted by financial markets as signaling a willingness to cut as early as September. However, his words still reinforced that the Fed remains patient awaiting more evidence of inflation and labor market trends before cutting rate policy even though rate policy remains restrictive.

Treasury yields declined after his speech.

• The Fed is expected to cut its rate policy in one of its remaining three meetings before year-end, but short-term rate policy is not likely to affect much change in the rates consumers see on mortgages or auto loans, as those rates are more influenced by longer-term Treasury rates like the 10-year. The 10-year is not widely expected to decline in the coming months.

BOTTOM LINE: Economic indicators in July painted a nuanced picture. Housing starts surprised to the upside, especially in multifamily, while permits lagged – hinting at a slowdown ahead. Existing home sales beat expectations, with inventory ticking up but still tight. Jobless claims are rising in August, although there is no surge in layoffs. And the Fed? Powell’s tone at Jackson Hole suggests rate cuts are on the table, possibly as soon as September, but the Fed remains cautious. Mortgage and auto loan rates may not budge much, as long-term yields hold firm. All eyes now turn to inflation and labor data to confirm the next move.

Jonathan Smoke

Chief Economist

Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.