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 increased significantly more than expected, reaffirming the resilience of consumer spending. In contrast, homebuilders' sentiment fell to its lowest level in a year due to the effects of high mortgage rates and ongoing labor shortages. While the cornerstone of the U.S. economy—consumer spending—is withstanding inflation, the interest-rate-sensitive housing market is clearly showing the impact of higher rates.

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 U.S. rose 1.2% in August compared to the previous month. This marks a reversal from a 0.5% decline in July, exceeding the 0.8% increase forecast by experts surveyed by Dow Jones.

Sales increased in 12 out of 13 sectors. Non-store retail sales, mainly driven by online retailers, surged by 2.6%, marking the largest increase since February 2025. Sales of clothing, sporting goods, electronics, and general merchandise also rose, supported by back-to-school demand.

Rising oil prices led to a 3.1% increase in gasoline station sales. Core retail sales, which exclude autos and gasoline, also climbed by 1.2%. Sales at restaurants and bars increased by 1.2%, reflecting continued robust service consumption.

Since retail sales are a nominal indicator that does not adjust for price changes, the overall increase may have been partly driven by rising prices, such as fuel costs. However, the substantial rise in sales excluding gasoline and automobiles suggests that U.S. consumer spending has not sharply contracted in the face of ongoing inflation.

On the other hand, the burden of higher interest rates has become more pronounced in the housing market. On this day, the National Association of Home Builders (NAHB) and Wells Fargo reported that the Housing Market Index (HMI) fell by 3 points from the previous month to 32 in September. This is the lowest level since September 2025 and falls short of the expert consensus of 34.

An HMI reading below 50 indicates that more builders view the housing market conditions as "poor" rather than "good." The index has remained below the baseline of 50 for over two years.

Detailed indicators also showed weakness. The present sales index fell 4 points from the previous month to 35. The index for sales expectations over the next six months dropped 6 points to 37, reaching its lowest level since early 2023. The index measuring the flow of prospective buyers held steady at 23 compared to the previous month.

Bill Owens, Chairman of the NAHB, explained that builders are facing a decline in buyer traffic due to high mortgage rates, rising material and fuel costs, and ongoing labor shortages. He stated, "In some regions, there are reports that stricter immigration enforcement is preventing even legal workers from coming to construction sites."

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