Economics week ahead

Wells Fargo Research Team Wells Fargo

Next week is quiet on the domestic data front, with Tuesday's housing starts the main report. Starts likely declined further under pressure from elevated mortgage rates. Abroad, Canada CPI likely picked up on energy costs, though steady core inflation still argues for policy patience. U.K. and Japan inflation should also accelerate, reinforcing our calls for November and December rate hikes, respectively. China’s Q3 GDP growth likely edged higher as exports and policy support offset domestic weakness.

U.S. week ahead

Housing Starts • Tuesday

Residential construction faces intensifying pressure. Housing starts have declined in four of the past five months alongside a steady rise in mortgage rates. Mortgage rates specifically surpassed 7.0% by the end of September, setting a fresh affordability challenge for prospective buyers. As a result, the NAHB home builder survey showed a sharp deterioration in builders’ sales expectations and corresponding increase in price cuts. Multifamily construction is simultaneously soft amid rising financing costs and modest rent growth. Looking to September, a pullback in permits signals another drop in starts. We forecast housing starts fell 2.0% to 1,250K.

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Wells Fargo Research Team

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