US housing starts rebounded in June

___

Published Date 7/19/2017

Yesterday, the July NAHB housing market index was soft compared to estimates, declining to 64, the lowest level since last November. Buyer traffic in negative read at 48 (anything under 50 is negative), the second month in a row that traffic has been in negative territory. This morning, somewhat of a reversal with two reports.

Weekly mortgage apps were +6.3% from the prior week that were down 7.4%; purchase apps increased 1.0% from the previous week’s -3.0%; refinance apps up 13.0% from the prior week’s drop of 13%.

June housing starts and permits at 8:30 am EDT; both better than forecasts. Starts were thought to be up 6.7% but were up 7.7% at 1,215K. May starts were revised higher, from 1,092K to 1,122K. Starts for single-family homes rose 6.3% in June's report to 849,000 with multi-family up 13.3% to 366,000. June building permits expected at 1,206K +3.2%, as reported 1,254K and +6.8%. Permits for single-family homes rose 4.1% to an 811,000 rate with multi-family permits up 13.9% to 443,000. Good news for the housing industry after reporting weaker in May. Despite June's gains and a negative for GDP, second-quarter starts and permits are below those of the first quarter, averaging 1.164 million for starts vs 1,238K. Permits are also down, 1217K vs 1,260K.

The stock market continues to increase; bad news or good, it appears not to matter. Yesterday’s failure to do anything on health care didn’t matter; weak economic outlooks don’t matter, the equity markets in the US and globally are on an unrelenting march higher. This morning, the DJIA opened unchanged, NASDAQ +22 (tech stocks keep increasing), S&P +4. 10-yr. at 9:30 2.666% +0.6 bp, essentially unchanged. FNMA 3.5 30 yr. coupon unchanged from yesterday’s close and +3 bps from 9:30 yesterday morning.

The economy is holding together, but with weak GDP growth and so far, no increases in wages as the Fed believes. Washington in complete disarray. The debt ceiling is coming and Congress must approve a $1 trillion spending bill. All of this and the inability to accomplish any reforms haven't dented investing in equity markets. No one wants the US dollar, another testimony to the mess in Washington. The extreme lack of volatility is a warning that investors have become very complacent and that is a warning sign. Why should you care? Because if (when) the stock market does begin a significant correction, interest rate markets will be the beneficiaries.

Interest rates holding well so far today; the 10-yr. and mortgages unchanged. No more data today.

Yesterday, the bellwether 10-yr. broke to 2.26%, falling below its 20, 40 and 100-day averages. No follow-through today but no retreat. Technical indicators somewhat better, pointing to higher MBS prices (lower rates) in the near future.

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

NMLS #113731

ADVERTISEMENT | an Equal Housing Lender (www.nmlsconsumeraccess.org) | Terms, conditions, and restrictions may apply. Loan products are subject to availability and credit approval. Not a commitment to extend credit.

Important notice regarding recent wire fraud attempts: Cyber criminals are hacking email accounts and sending emails with fake wiring instructions. These emails are convincing and sophisticated. Your lender will NEVER provide you with wiring instructions and will NEVER ask you to wire funds. Please contact the settlement company and get wire instructions directly from them. Never trust wiring instructions sent via email. Always independently confirm wiring instructions in person or via a telephone call to a trusted and verified phone number. Never wire money without double-checking that the wiring instructions are correct. Also, ask your settlement company if bringing a cashier’s or certified check is an option, instead of a wire, for your funds needed at closing.