US Consumer Spending Holds Up Despite Inflation, While Homebuilder Sentiment Hits One-Year Low

Retail Sales Rise 1.2%, Surpassing Market Expectations

Housing Market Index Falls to 32, Lowest in a Year

High Interest Rates, Rising Material Costs, and Labor Shortages Intensify Pressures

Retail sales in the United States posted a much larger-than-expected increase, reaffirming the resilience of consumer spending. In contrast, homebuilders' sentiment dropped to its lowest point in a year, pressured by high mortgage rates and ongoing labor shortages. While consumer spending, the core of the U.S. economy, continues to hold up despite inflation, the interest rate-sensitive housing market is showing visible signs of high-interest rate impacts.

A worker is displaying products at a supermarket located in New York. New York (USA) - Photo by Yoonjoo Hwang

The U.S. Department of Commerce announced on the 16th (local time) that retail sales in the United States rose by 1.2% in August compared to the previous month. This marks a return to growth from the 0.5% decline in July and surpasses the 0.8% increase forecasted by experts surveyed by Dow Jones.

Of the 13 sectors measured, sales increased in 12. Non-store retail, including online retailers, grew by 2.6%, marking the largest gain since February 2025. Back-to-school demand contributed to increases in sales at clothing, sporting goods, electronics, and general merchandise stores.

Gasoline station sales rose by 3.1% due to higher oil prices. Core retail sales, which exclude automobiles and gasoline, also climbed by 1.2%. Restaurant and bar sales likewise increased by 1.2%, indicating continued strength in service consumption.

Since retail sales are a nominal indicator that does not reflect price changes, rises in prices such as oil could have contributed in part to the total increase rate. However, the strong growth in sales excluding gasoline and automobiles suggests that consumer spending in the United States has not experienced a sudden contraction in the face of persistent inflation.

In contrast, the housing market is feeling the distinct pressure of elevated interest rates. On this day, the National Association of Home Builders (NAHB) and Wells Fargo reported that the Housing Market Index (HMI) for September dropped by 3 points from the previous month to 32. This is the lowest reading since September 2025 and falls short of the expert forecast of 34.

When the HMI is below 50, it indicates that more homebuilders rate the housing market as "poor" rather than "good." This index has remained below its critical threshold of 50 for over two years.

The detailed indicators also showed weakness. The current sales conditions index fell by 4 points to 35, while the prospective sales index fell by 6 points to 37, the lowest since early 2023. The index for prospective buyers’ traffic remained unchanged from the previous month at 23.

Bill Owens, Chairman of NAHB, explained that builders are facing a decrease in buyer traffic due to high mortgage rates, as well as rising material and fuel costs, and persistent labor shortages. He added, "In some regions, there have been reports that even legal workers are not showing up at construction sites as immigration enforcement increases."

This content was produced with the assistance of AI translation services.