Morning Report: Housing starts jump 9/19/18

Vital Statistics:

Last Change
S&P futures 2908.75 -3
Eurostoxx index 378.74 0
Oil (WTI) 69.94 0.09
10 year government bond yield 3.05%
30 year fixed rate mortgage 4.78%

Stocks are higher this morning on no real news. Bonds and MBS are down.

Mortgage applications increased last week despite a big uptick in rates. The overall index rose 1.6%, driven by a 4% increase in refis and a 0.3% increase in purchases. FWIW, I wonder if there is some sort of strange adjustment related to the Labor Day holiday going on. Rates hit a 7 year high, with the conforming 30 year fixed hitting 4.88%.  ARMs increased to 6.5% of all activity.

Housing starts rose to an annualized pace of 1.28 million in August, which is up over 9% on a MOM and YOY basis. Permits disappointed however, falling just under 6% on a MOM and YOY basis. Multi-fam (which is notoriously volatile) drove the decline in permits and the increase in starts. Single family permits were up about 6%. Geographically, the action was in the West and South, while the Northeast and Midwest were flat / barely up.

Housing starts will probably take a step back in the next few months as construction workers will be occupied rebuilding North Carolina.  Labor remains an issue for new home construction, but the tariff-driven spike in lumber prices is over, and futures are trading at 18 month lows.


Fannie Mae thinks growth has peaked for this cycle and that the second quarter’s torrid growth rate of 4.2% was artificially boosted by inventory build ahead of tariffs. This had the effect of borrowing growth from future quarters. In all fairness, they are probably correct – a 4.2% growth rate is so far above historical trend that it is almost by definition unsustainable. Housing continues to punch below its weight as affordability issues weigh on sentiment. Note that the number of people saying it is a good time to buy a house has hit the lowest level since the survey began 8 years ago. Blame rising rates and home price appreciation outstripping income growth.  FWIW, they are somewhat bearish on consumer spending going into the 4th quarter, which seems to defy a lot of data we are getting about retailer activity.

Insured losses form Hurricane Florence will be in the $1.7 to $4.6 billion range.

36 Responses

  1. Trump actually has a good take on the Kavanaugh situation and why it’s important to give the accused an opportunity to testify before the committee:

    “I feel so badly for him that he’s going through this, to be honest with you. I feel so badly for him. This is not a man that deserves this… this should have been brought up long ago and that’s what you have hearings for, you don’t wait until the hearing is over and then all of a sudden bring it up. When Senator Feinstein sat with Judge Kavanaugh for a long period of time a long, long meeting. She had this letter, why didn’t she bring it up? Why didn’t she bring it up then? Why didn’t the Democrats bring it up then? Because they obstruct and because they resist. That’s the name of their campaign against me. Resist. And they just obstruct. And, frankly, I think they’re lousy on policy and in many ways they’re lousy politicians, but they’re very good on obstruction. And it’s a shame. Because this is a great gentleman. With all of that, I feel that the Republicans, and I can speak for myself, we should go through a process, because there shouldn’t even be a little doubt. There shouldn’t be a doubt. Again, they knew what they were doing. They should have done this a long time ago, three months ago, not now. But they did it now. So I don’t want to play into their hands.”

    Liked by 1 person

    • So I don’t want to play into their hands.

      Every single day that passes without a vote on Kavanaugh is doing exactly that.


      • Well, that depends on what your perspective is. I think Trump wins either way. A failed Kavanaugh nomination gives him ammunition and something else to excite the base, especially ahead of midterms, and if it succeeds it’s another win for him and the opposition will become even more insane and drive more people either away from the D’s or just out of political awareness entirely.


  2. Should have listened to McConnell:


    • Some variation of this would have happened to any of Trumps nominees. Either sex or racism, guaranteed.


      • They didn’t with Gorsuch, or if they did it was basically ignored.


      • Some variation of this would have happened to any of Trumps nominees.

        I think it keeps getting worse. After each successful confirmation (whether they manage to nuke Kavanaugh or not) they will get worse. More people coming out of the woodwork with terrible stories. Really, a conservative minority woman is their best bet at this point. The next one better not be another old white dude.


        • “Mr. Trump, who in recent days has made mocking reference to the #MeToo movement at a rally and in private conversations, is said to be intrigued by the political statement of picking a woman. “


        • is said to be intrigued by the political statement of picking a woman.

          I think he should. It’s his best strategy. It will be mocked, and the candidate pilloried, but I I think mixing it up would be smart, and pick either a woman or minority (or ideally both!).


        • KW:

          It will be mocked, and the candidate pilloried, but I I think mixing it up would be smart, and pick either a woman or minority (or ideally both!).

          It has obvious appeal, but I wonder what value it actually provides at this point. Gender and race identity politics is just a cudgel to be used by the left to beat up its opponents, it isn’t an actual principle. The D’s/left are shameless about their hypocrisy. A woman nominee who was expected to reverse Roe would be just as vilified and smeared as any male nominee, perhaps even more. Just look at what happened to Clarence Thomas. And the vote for him was a mere 52-48.

          Liked by 1 person

        • Sure, but it would be ironic if the decision overturning Roe was written by a woman.


        • @scottc1: I think the benefit is that it is riskier, not necessarily within the media or the beltway but amongst the general public. It can be illustrative, especially for those in the general public who aren’t hard leftists but like the idea of diversity. Also, I like the idea of diversity both in cultural background and experience and ideas and feel like we’ve got three liberal women on the court and no conservative women. I demand balance!

          Also, there is risk in going after minorities and women or both, even for Democrats. Fellow politicrats and the media will provide uncritical cover but there are small pockets of the general public that still won’t respond positively. I realize it may not change the tone of the hearings but still, I think it is generally positive to provide examples, even if the media and left ignores them, that conservatives are animated by ideas and not not by race or gender (which I know is ironic given my advocacy for SCOTUS affirmative action, but I also don’t believe only white men can be solid, conservative, originalist judges). But we will see what actually happens.


    • Next nomination should be a woman. Or a racial minority. Or both.


  3. The logical end result of minority hiring preferences:

    “A Man Says His DNA Test Proves He’s Black, and He’s Suing

    A case in Washington questions how the government defines race.”


  4. Liked by 1 person

  5. Andrew McCarthy channels me, saying virtually everything I have been thinking since the weekend:

    It is fashionable throat-clearing at this point to offer some vertiginous, ostentatiously sympathetic twaddle about how Professor Ford is credible in the sense that she truly believes what she has claimed, yet mistaken about . . . well . . . everything that matters. Sorry, I’m a simple man. What’s happening here is pure BS.

    I don’t know if something awful really happened to Ford when she was 15. None of us will ever know. Apparently, Ford herself does not know basic facts either, since she cannot tell us where and when the alleged assault happened, and what she did in the aftermath. Giving her the benefit of the doubt that it happened as she claims it happened, she hasn’t come close to establishing that Brett Kavanaugh, as opposed to some other kid she has forgotten, was her assailant; that is, she has not established that her memory of the assailant can be trusted when she cannot recall other rudimentary details. We can feel sympathy for her while nevertheless inferring that she does not want to testify because she cannot explain the oddities of her account. Or we can justifiably suspect that the whole thing is a partisan stunt….

    …As I argued yesterday, you are not going to have decent, meritorious people in law and politics if Democrats are permitted to mug Kavanaugh the way they mugged Judge Bork and Justice Thomas, the way they try to mug every Republican judicial candidate whose nomination threatens to close off the courts as an avenue of radical social change — i.e., whose confirmation makes it more likely that the Left will have to try to convince voters and lawmakers in the democratic process, rather than have unaccountable judges impose progressive pieties.

    The long-term goal here is to make the judicial-confirmation process so notoriously savage and demeaning that no sensible, well-meaning conservative or moderate person would agree to put himself and his family through it. The idea is to stock the courts with nothing but progressives and mediocrities willing to roll over for progressives. It is a disgrace that this should happen in this republic, and in connection with the courts, which are not supposed to be political forces, but which have been converted into an uber-political institution that progressives are desperate to control.

    The short-term goal is to delay Kavanaugh’s nomination. Democrats should not be allowed to get away with it.

    Give Professor Ford until noon today to accept the committee’s unnecessarily indulgent invitation to testify on Monday. If she has not accepted by the deadline, Senator Grassley should proceed with the committee vote tomorrow (Thursday) as previously scheduled. If Democrats scream bloody murder, who cares? They’re a one-trick pony. They are going to scream bloody murder no matter when the votes are taken.

    No more delay. It only rewards the mugging and encourages more of it.

    Liked by 1 person

    • They’re a one-trick pony. They are going to scream bloody murder no matter when the votes are taken.

      This. All the caterwauling is just boilerplate progressive rhetoric. Ignore it.

      Liked by 1 person

  6. Ramesh Ponnuro at NR says:

    Yesterday in this space, I pointed out that Judge Kavanaugh’s categorical denial of the allegations against him — including the denial that he ever went to a party resembling Professor Ford’s description — had raised the stakes for him in a way that might suggest he has a high degree of confidence that no evidence will emerge to disprove his claim.

    I genuinely don’t understand why anyone thinks his categorical denial has upped the stakes. Who seriously believes that, in the current #metoo environment, any indication that some type of incident might have happened would not have been fatal to his nomination? The do-or-die stakes were established by Feinstein when she made the allegations public, not by Kavanaugh’s denials. He had no choice.

    Liked by 1 person

    • Sure he did. He could have gone with effectively the same thing that Mark Judge said

      “I don’t recall the events from that long ago”

      And maybe couple it with a non-apology apology:

      “But if I did anything disrespectful to Professor Ford while we were both in high school, I apologize for it”.

      Liked by 1 person

      • jnc:

        He could have gone with effectively the same thing that Mark Judge said

        And, like I said, that would have certainly killed his nomination.

        Liked by 1 person

      • I don’t think he could have done that. Mark Judge, based on what I’ve read, has every reason to be worried he might have been somewhere or participated in something he no longer remembers.

        Kavanaugh’s strategy was the only one available to him if he wants to be on the Supreme Court, which I assume he does. A “I don’t recall but apologize if” would be taken as an admission of guilt by the Dems and the press and he would have been pilloried as the rapist judge so callous he doesn’t even remember his victims.

        All-in was his best option.


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