Retail sales declined in December more than expected, reports Cox Automotive’s Auto Market Weekly Summary for January 23.

Spending was down 1.1% in December with a drop of 0.9% month over month. November sales were revised down from an initial decline of 0.6% to a decline of 1.0%.

In the auto sector, sales were down even more, with sales of motor vehicles and parts falling 1.2% and overall market sales declining 1.1%, Cox reported. Spending at gas stations also dropped 4.6% in December, despite lower gas prices.

Entities seeing the largest declines included:

A 2.0% drop in sales overall at gas stations, furniture, home furnishing, electronics, and appliance stores A 1.1% drop in sales at motor vehicle and parts dealers

A 1.1% drop in sales at non-store (e-commerce) retailers and miscellaneous store retailers.

Of the major retail categories, only building material stores (+0.3%) and sporting goods, hobby, book, and music stores (+0.1%) saw gains.

Retail sales were up 6.0% on a nominal basis in December, the same as in November. Cox reported a 1.1% decline in retail sales for the month and a 0.4% decline from a year ago.

The retail trend shows that consumers are spending less. Retail sales do not include spending on things like travel, which was strong in December according to credit card spending data.

Residential construction decreased in December. The seasonally adjusted annualized rate of housing starts fell by 1.4%, but analysts report the decrease was less than expected. Permits dropped 1.6% when a smaller decline had been expected, Cox reports, noting the starts decrease was only in multifamily housing, which saw a 19% decline while single-family starts grew 11.3%.

Total housing starts fell 21.8% from a year ago and decreased by 10.1% compared to December 2019. The permits decline occurred in single family housing, with a 6.5% decline compared to a 5.3% increase in multifamily. Cox reported that permits were down 29.9% from 2020 and 7.6% from 2019.

Skyrocketing mortgage rates in 2022 reduced demand for single-family homes, while the spike in multifamily construction is producing new apartments as slowing economic growth starts reduces demand.

Cox reported that existing home sales fell less than expected in December but were still down for the 11th month in a row. The SAAR for existing home sales fell to 4.02 million from 4.08 million in November. Existing home sales were down 34% from 2020 and were at the slowest pace since November 2010.

Real estate inventory declined to 970,000 units, up 10.2% from a year ago. Still, the National Association of Realtors reports inventory remains limited. However, homes are selling quickly with 57% of the homes sold in December on the market for less than a month. The average time on the market was 26 days, up from 24 days in November and 19 days in December. The months’ supply of homes for sale fell to 2.9 months and the median sales price declined to $366,900, up just 2.3% from a year ago, Cox noted.

Seasonally adjusted initial jobless claims declined by 15,000 to 190,000 for the week ending January 14, which was the lowest weekly level since September, while non-seasonally adjusted initial claims declined by 54,000. Cox reported that the unadjusted numbers are higher than at the beginning of 2020.

Continuing claims by individuals who previously filed and remain on traditional unemployment compensation increased by 17,000 from the previous week, bringing the total to 1.65 million as of January 7. That level of continuing claims is 116,000 lower than before the pandemic, the Cox analysis found.

Though the labor market is not as strong as it was a year ago, Cox concluded that there is little evidence of major deterioration in jobless claims data. The report concludes that jobless claims are historically low relative to the job base.