Navigating the Latest Trends in Housing Starts and Building Permits for the Residential Market

The monthly report on New Residential Construction from the Census Bureau provides insight into three main areas: building permits, housing starts, and housing completions. Of these, building permits and housing starts are the most scrutinized. It’s important to note that construction activities can’t commence without securing permits, and there is usually a delay between the issuance of permits and the beginning of construction. Occasionally, there is a discrepancy between the number of permits and actual housing starts, which is currently evident in the latest figures. Although construction has been operating above pre-COVID levels, the rate at which new homes are being started has gradually decreased. This trend might seem concerning, but it’s counterbalanced by 2024 marking the highest rate of housing completions since 2006. Overall, while the housing market experienced a significant boom in 2021 and early 2022, its subsequent cooling has been more gradual and orderly than in previous downturns. Another subtle point of interest in the current data, as well as in broader historical trends, is the difference in performance between single-family and multifamily housing starts. Single-family housing has maintained strong numbers, consistently above pre-pandemic levels, while multifamily starts have dipped to their lowest in ten years.

Rising Builder Optimism: A Positive Shift in Housing Market Confidence

Each month, the National Association of Home Builders (NAHB) and Wells Fargo release the Housing Market Index (HMI), commonly recognized in the industry as an indicator of builder confidence. The latest figure for December has been released, matching November’s levels and indicating that builders are aligning with a persistently cautious outlook. This stagnation in the index can be attributed to factors such as single-family home construction, which initially slumped in 2022, and multi-family construction, along with sustained high interest rates, both of which have hindered the index’s recovery.

Detailed construction data often provide a clearer picture of the housing market than sentiment surveys, though the latter can still offer valuable insights into current trends and potential future developments. Notably, the survey component that predicts builders’ expectations for the next six months is seeing improvement, reaching its highest point since 2022. Trends in this chart show a modest upward trajectory rather than a flat line.

Additional findings from the recent release include consistent price reductions, with 31% of builders lowering prices in both November and December, and the average reduction holding steady at 5%. Moreover, sales incentives were part of 60% of transactions, mirroring November’s figure.

Navigating the Mortgage Market: Key Insights from November’s Economic Indicators

Bonds made a noticeable rally in response to this morning’s inflation data, although the gains have largely diminished since then. Initially, the data provided a stronger rally than anticipated, reflecting the prevailing worries about rising inflation rates.

This concern originated from the last two Consumer Price Index (CPI) reports, which showed an increase to around 0.3% in the core monthly measure, after averaging 0.13% in the previous three months. Starting in July, Core CPI rose consistently each month until today’s report, which reversed that trend.

Excluding the shelter component, inflation sits at or below the Federal Reserve’s 2% target, with core at 2.1% and overall at 1.3%. Early trading saw bonds revert to levels similar to yesterday morning, not a significant achievement in the grand scheme, but a strong performance given the uneven risks involved.

The response to the CPI release almost matched the trading volume seen during the initial half-hour of the jobs report reaction.

For those seeking deeper insights, several charts highlight the CPI data. One chart indicates that goods and energy prices are contributing to deflation while housing and services mainly drive inflationary pressure.

Another chart zeroes in on housing inflation, which remains high with month-to

Understanding the Latest Trends in New Residential Construction and Their Impact on the Mortgage Market

In September, the Census Bureau released its New Residential Construction report, revealing few unexpected developments despite some varied signals. The annualized rate for building permits, which can indicate future building activity, dropped to 1.428 million. Although this suggests a slight slowdown, the decline was in line with market expectations. The cooling trend in new construction has been ongoing for over two years, but it’s worth noting that activity levels remain higher than seen in mid-2019.

Regarding housing starts, the figures showed a small increase from projections, ending at 1.354 million, with only a slight decrease from the previous month. This segment has shown a broader cooling over recent years but has remained relatively stable in the short term.

The story differs when it comes to housing completions. Unlike starts and permits, completions have not seen a correction, maintaining an upward trajectory since mid-2023 and showing a consistent rise since 2011, despite a slight drop from last month’s peak, which was the highest since 2007. This data provides valuable insight into the overall construction landscape.

Navigating a Bumpy Ride: Insights from the Latest Mortgage Market Turbulence

The recent trend of rate increases has shown signs of stabilizing this past week after a notable reaction to the Federal Reserve’s recent announcement. This pullback, although minor, reflects the typical “buy the rumor, sell the news” behavior seen after the Fed’s rate decisions. By week’s end, this corrective phase seemed to have settled, supported by favorable economic data. However, the forecast remains uncertain as next week promises to be heavily influenced by additional economic indicators impacting bonds and rates. Fortunately for market watchers, the correction has been minimal.

Key Economic Data and Events:

– Month-over-Month Core PCE: 0.1% vs 0.2% forecast, 0.2% previous (Unrounded: 0.13)
– Year-over-Year Core PCE: 2.7% vs 2.7% forecast, 2.6% previous
– Consumer Sentiment: 70.1 vs 69.3 forecast, 67.9 previous

Market Movements:

– 08:37 AM: Slightly stronger performance post-release of PCE data, with 10-year yields falling by 2.9 basis points to 3.769% and MBS rising by 0.125

Understanding the Shift: June’s Employment Report and Its Impact on Mortgage Rates

Monday saw little change in the bond market as trading volumes remained exceptionally low and volatility was minimal. The most notable movements occurred at the 8:20 AM CME open, where Treasuries quickly recovered from minor overnight losses. A brief uptick followed by a drop at the NYSE open at 9:30 AM set the stage for a day of sideways trading for both Treasuries and mortgage-backed securities (MBS), which ended the day virtually unchanged from Friday. This calm period is likely to be short-lived with upcoming Treasury auctions, Powell’s testimony, and, most critically, Thursday’s Consumer Price Index (CPI) data.

Market Movement Recap

08:48 AM Despite initial overnight weakness, bonds bounced back early in the day. MBS rose by 2 ticks (0.06), while the 10-year Treasury yield fell by 0.4 basis points to 4.277%.

11:58 AM MBS pulled back slightly to unchanged levels, and the 10-year Treasury yield rose by half a basis point to 4.287%.

03:27 PM Trading remained stable in the afternoon, with MBS up 1 tick (0.03) and the 10-year Treasury yield declining nearly 1

Navigating Mortgage Market Volatility: Key Insights for July 2024

Today, the bond market will shut at 2 pm instead of its usual 5 pm closing time in observance of the Independence Day holiday, with a full closure scheduled for tomorrow. Despite the shortened trading hours, the bond market has performed well. However, the overall economic outlook appears less optimistic. The most notable economic update today is the ISM Services report, which fell significantly short of expectations and marked a substantial decline from previous figures. Specifically, business activity dropped sharply from 61.2 to 49.6, marking the first reading below 50 since the initial lockdowns in 2020. This shift suggests a broader economic downturn, particularly striking after last month’s exceptionally high reading. Bonds responded with heightened activity, seeing the highest data-driven trading volume since the significant increases in jobless claims and the notable miss in the Producer Price Index on June 13.

Insights from the Mortgage Market: Key Takeaways from June 26, 2024

Bond Market Hints at Trend Shift

Over the past ten days, the bond market has shown little movement when mapped against Treasury yields. During U.S. trading hours, yields have largely remained between 4.21% and 4.29%, briefly touching but not breaking past these levels. The 4.29% ceiling has seen more action, culminating in a modest breakout today with yields finishing just under 4.32% at the 3 PM close. However, this movement wasn’t driven by major, influential events typically noted in bond-watching strategies. Factors like potential currency intervention by Japan and high inflation in Australia, while notable, pale in comparison to significant U.S. economic indicators expected soon, such as this Friday’s Personal Consumption Expenditures (PCE) report and other key data in early July. Any significant trend shifts will likely stem from these forthcoming reports. For now, the current market behavior represents a minor setback rather than a major trend alteration.

Economic Data and Events:

– New Home Sales: 619k versus a forecast of 640k, down from a previous 698k.

Market Movement Recap:

– 10:08 AM: Experienced moderate weakness overnight with additional selling around 9:15 AM.

Navigating the Ever-Evolving Mortgage Market: Key Insights for 2024 and Beyond

Do you think you’re doing exceptionally well as a lender? If so, you’re not alone. The majority of lenders are enjoying profitability, driven by cost-cutting measures and income from servicing, as well as the exit of unprofitable companies. According to the latest MBA Performance Report, 59 percent of mortgage banking companies turned a profit in the first quarter.

However, the same can’t be said for our government’s financial status. The Congressional Budget Office forecasts the federal budget deficit to balloon to around $1.9 trillion this year, up from an earlier estimate of $1.5 trillion. This increase reflects higher spending on student loans, Medicaid, and a recently approved $95 billion foreign aid package. The national debt is projected to exceed $56 trillion over the next decade, equating to 122 percent of GDP, which is even higher than the 106 percent ratio post-World War II in 1946.

On the other side of the Atlantic, the eurozone is grappling with its own fiscal challenges. The European Central Bank has issued warnings to eight of its member states, including Belgium, France, and Italy, about their excessive budget deficits.

Today’s podcast, sponsored by Candor, is available online. Candor’s

“Breaking Down the Mortgage Bonds Market: An Insightful Analysis from June 13, 2024”

In short, recent economic figures this morning promptly offset the frailty observed following the Federal Reserve’s statement yesterday, effectively reinstating the lowest interest rates achieved post the Consumer Price Index (CPI) data yesterday.

Of greater bearing is likely today’s core Producer Price Index (PPI) that records a massive beat having registered 0.0 compared to the anticipated 0.3. Jobless claims exceeding 240,000 have played their part, although there exist some reservations regarding the seasonal adjustment factors due to the manner in which raw data has seeped into adjusted data over the preceding two years.

Specifically, there is a noticeable spike and subsequent fall in numbers for the months of July/August which is apparent in raw figures and strangely enough, also in the adjusted figures. This indicates an inclination of potential exaggeration in the hike in claims observed today, based on the adjustments applied.

These lingering uncertainties may be influencing the bond market’s wavering conviction regarding the speed of this morning’s rally. Regardless, it appears as though yields have established a firm baseline when attempting to better yesterday’s peak levels.