The New Home Sales market surged into the end of 2017, so understandably pulled back a bit in the first month of 2018. January saw a welcomed move of supply into the market, though lack of supply remains an issue constricting the growth of sales. Home Prices continue to trend higher, but given the quick rise in home prices of late, some slight moderation was welcomed and will help to lower fears of overheating.

Indicators on the factory sector were mixed for the month. Durable Goods Orders reported more signs of moderation than acceleration. New orders fell 3.7%, and, unfortunately, core capital goods were a part of the weakness. Despite strength in the regional surveys, the factory sector appears to be mirroring the housing sector, moderating a bit following last year’s rush at year-end. The gap did not converge this month. However, the ISM Manufacturing Index topped even high-end expectations, reaching its highest level in 14 years. Construction Spending was flat in January, nonresidential spending being the weak link.

Consumer Confidence remains a standout amongst economic data. February’s reading easily topped high-end expectations. Similarly, both the current conditions and expectations components within the Consumer Sentiment report were robust. This is somewhat a contrast to more limited strength in actual consumer spending. The income side of Personal Income & Outlays reflected tax changes with personal taxes down 3.3% in the month, underpinning a solid 0.4% M/M rise in personal income. Spending data was softer, up just 0.2%.

GDP was revised just 0.1% lower to a 2.5% annualized rate. Consumer spending remained quite strong. Where spending on durables was lacking, service spending more than made up for it. Inventory growth rose quickly, as businesses hurried to restock shelves amid strong consumer demand.