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TWO-FER TUESDAY: DATA DURING WARTIME

Economic indicators often arrive in pairs on Tuesdays, and today's data offers a look back to a time of war, which ended yesterday.

Groundbreaking on new American homes USHST=ECI tumbled by 15.4% in May to 1.177 million units at a seasonally adjusted, annualized rate (SAAR), according to the Commerce Department.

That's 17.7% fewer than the 1.430 million units SAAR analysts were expecting. And to rub salt into the wound, it follows April's 8.5% drop, revised down from the previously stated 2.8% dip.

Excavating below the surface, single-family projects -- which account for the lion's share of the total -- dipped by 1.9%, while the starts in the volatile multiple-unit segment tanked, plunging 40.2%.

Building permits USBPE=ECI -- considered one of the housing market's more forward-looking indicators -- softened by 0.7% to 1.413 million units SAAR, or 0.5% shy of consensus.

On the permits side, single-family projects dipped 0.6%. Here again, weakness came from the multiple-unit segment, which fell 2.8%.

Completions of privately owned homes were down 8.1%.

All in all, the report echoes the dreary tone of Monday's homebuilder sentiment report from the NAHB; regulatory headwinds and high borrowing costs are pushing prices beyond the grasp of many would-be buyers, and economic uncertainties are keeping them on the sidelines.

"A recovery in homebuilding remains a long way off," writes Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "Mortgage rates remain too high for many people to consider purchasing their first home, and hopes of the FOMC being able to ease policy this year have dimmed."

"In addition, homebuilders currently hold excess inventory of unsold new single-family homes, and the vacancy rate in the private rented market is high and rising, both due to the slowdown in population growth," Tombs adds.

Shifting gears, the cost of goods imported to the United States USIMP=ECI (excluding tariffs) surged 1.9% last month, per Labor Department data, nearly double the 1.0% increase economists predicted.

Much of this was driven by the U.S.-Israeli war on Iran, the closure of the Strait of Hormuz and its domino effect on global shipping.

Digging deeper, a 13% jump in imported gasoline prices and a 5.4% surge in industrial supplies provided much of the heat, along with a 1.3% rise in capital goods. Excluding petroleum, import prices rose by a more sedate 0.8%.

Year-over-year, import prices have shot up by 6.7%, and the cost of imported petroleum has skyrocketed 48.1%. Industrial supplies imported to the United States have jumped 22.2% from May 2025.

Import/export prices differ from other major inflation indicators with things like currency exchange rates, foreign demand and geopolitical developments thrown into the mix.

"We expect import prices to gradually decelerate in the second half of the year as geopolitical tensions ease and global supply conditions improve," says Vivian Chen, market economist at Nationwide Financial. "However, near-term inflation pressures are likely to remain elevated as earlier war-related cost pressures continue to pass through the economy, and normalization in energy production and global logistics networks will take time."

Here's a chart that shows annual import/export price growth against the dollar index, which tracks the greenback against a basket of world currencies.

(Stephen Culp)

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