Investors Head for the Exits; Construction Spending, Seniors Housing Confidence Up

Wall Street took another dive on Monday, the largest since last summer. But U.S. construction spending during December was 0.1 percent higher than the revised November figure. Also, builder confidence in the 55+ housing market for the fourth quarter of 2013 was up sharply on an annual basis.

It could be that equities market correction, long talked about, is finally under way. Wall Street took another dive on Monday, the largest since last summer, with the Dow Jones Industrial Average losing 326.05 points, or 2.08 percent. The S&P 500 was down 2.28 percent and the Nasdaq was off 2.61 percent. For its part, the Dow is now down about 7 percent for 2014.

The proximate cause for the drop was thought to be weak U.S. manufacturing numbers. According to the Institute for Supply Management on Monday, its manufacturing index was at 51.3 percent in January, down from 56.5 percent in December. The ISM employment index came in at 52.3 percent, down from 55.8 percent, and the new orders index was 51.2 percent, down from 64.4 percent in December. All of the indexes still point to expansion (being over 50), but the drops were still jarring.

The organization cited the lousy January weather, a transient condition, as an important factor in the decline, but investors seemed spooked anyway. Other reasons for the current nervousness include worrisome reports about the economies of the developing world, especially China, and the Fed’s decision to stay the course in tapering its bond-buying volume. There’s also the fact that the markets have risen so high for so long since their post-panic lows of 2009 that a correction seems due.

Construction Spending Edges Up 

The Census Bureau reported on Monday that U.S. construction spending during December was at an annualized rate of $930.5 billion, or 0.1 percent higher than the revised November figure. The December figure is also 5.3 percent higher than the December 2012 one.

Construction spending by the private sector accounted for all of the growth. Private construction in December was at an annualized rate of $663.9 billion, or 1 percent above the November tally. Public construction spending, on the other hand, came in at $266.6 billion, or 2.3 percent below the revised November number.

Residential construction was up. Its annualized rate was $352.6 billion in December, or 2.6 percent higher than in November. Nonresidential construction was a bit of a drag, since it came in at an annualized rate of $311.3 billion in December, or 0.7 percent below the revised November total.

Seniors Housing Confidence Up

Builder confidence in the 55+ housing market for the fourth quarter of 2013 was up sharply on an annual basis, according to the National Association of Home Builders’ on Monday, when it released the latest 55+ Housing Market Index. All segments of the market — single-family homes, condos and multi-family rentals — registered strong increases compared to the same quarter a year ago.

The single-family index increased 20 points year-over-year to a level of 48, which is the highest fourth-quarter reading since the inception of the index in 2008. All of the components of the 55+ single-family index also showed significant growth from a year ago. Present sales climbed 26 points to 53; expected sales for the next six months rose 24 points to 62; and traffic of prospective buyers increased nine points to 33.

“The 55+ segment of the housing market contains more discretionary purchases, so as expected it has taken longer for that segment to join the housing recovery,” NAHB chief economist David Crowe said in a statement. “The 20-point year-over-year increase in 55+ [index] for single-family homes matches earlier gains in the NAHB/Wells Fargo [index] for the overall single-family market and surpasses the more recent gains in the other housing segments.”