Morning Report: Housing starts miss by a wide margin

Vital Statistics:

S&P futures4,1583.8
Oil (WTI)66.000.07
10 year government bond yield 1.65%
30 year fixed rate mortgage 3.20%

Stocks are flattish this morning on no real news. Bonds and MBS are flat as well.

Housing starts came in at 1.57 million in April, which was way below the 1.7 million Street expectation. This is 10% below the March level of 1.73 million. Building Permits came in flat at 1.7 million. Not sure what drove the decline in starts, but it is a surprise. We might see this get revised away in later releases.

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The NAHB Housing Market index was flat at 83 in May as well. “Builder confidence in the market remains strong due to a lack of resale inventory, low mortgage interest rates and a growing demographic of prospective home buyers,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “However, first-time and first-generation home buyers are particularly at risk for losing a purchase due to cost hikes associated with increasingly scarce material availability. Policymakers must take note and find ways to increase production of domestic building materials, including lumber and steel, and suspend tariffs on imports of construction materials.” It may turn out that lack of materials was the reason for the miss in the housing starts number.

Loans in forbearance fell to 4.22% of all mortgages last week according to the MBA. “The rate of new requests dropped to 4 basis points, which is the lowest level since last March,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Of those in forbearance extensions, more than half have been in forbearance for more than 12 months.”

The Home Despot beat earnings estimates as revenues rose 33%. I am sure higher lumber prices are playing into that number. It does speak to the shortage of single family homes – if you cannot find a suitable move-up property, the next best option may be a home renovation. I would be interested to see if HomeStyle and 203k loan volume is up on this. That said, with labor shortages etc, I would imagine managing the construction process would be much more difficult these days.

Dallas Fed Chairman Robert Kaplan thinks we could possibly see a rate hike by the end of 2022. “I haven’t seen anything from that point to today that’s changed my view,” Kaplan said during a virtual town hall conversation organized by the bank. The U.S. labor market has a “good chance” of being at full employment by then and of having inflation at the central bank’s 2% target, Kaplan said.

The Fed Funds futures are still handicapping an 11% chance of a rate hike by the end of 2021.

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15 Responses

  1. I find Bill Kristol flip to the left both fascinating and also transparent. This does not remotely feel sincere to me, and who does he think he’s convincing that isn’t already 100% convinced?


    • He was a neocon, which means he is a leftist at heart, who couldn’t take the anti-Israel bent of the hard left.

      But his dalliance with limited government etc was the act.


      • To me it will be always be Jonah Goldberg’s flip-flopping that is perpetually fascinating.


        • I suspect that he was told if he wants to be booked on anything more than Fox he has to turn on the right.

          Also he has a daughter trying to get into college.


        • And I get a sense that there is a school of thought that suggest the Democrats and the left are becoming the better party for endless wars. Not that the Republicans have been bad but maybe there’s just a sense that the right wing voters are getting more likely to put in politicians who talk about ending some of our overseas commitments. The more populist wing of the Republican party is not compatible with The New American Century.


        • Part of that has to be the pull of folks he was a fan of, like Kristol.

          I feel like Goldberg has to be on fire with the cognitive dissonance. And, clearly, he didn’t like Trump. But I feel for a lot of the stuff he bought into someone else’s argument. His opposition to Kayleigh MacEnany felt . . . sympathetic? Like he had press friends who thought she was the worst person in the world for being mean to them, and so bent Jonah’s ear and Jonah said: “Yeah, right!”

          I mean he might have come up with the idea that when facing a super-hostile press the lies about you constantly, the best response was to meekly except their condemnations and mostly spend all the time in the press conference apologizing, but . . . eh.

          I haven’t tried listening to his podcast recently. I will try. Trying to give all the “not Jen Rubin” level NeverTrumpers I like a chance to move past Trump. But yeah–Goldberg has taking an interesting twist. Never seemed pro-Trump but seemed to become more anti-Trump as the administration moved forward, seemed incapable of giving the administration credit for anything (despite the good results they got, generally). He bought into media contortions of what Trump said instead of commenting on what Trump actually said, which is what he was supposed to be doing to Democrats . . .

          And then post-election he could have been an MSNBC commentator. Hard to believe it’s the same guy who wrote Suicide of the West and Liberal Fascism and The Tyranny of Cliches.

          But he’s never been as off-the-hook as Jen Rubin or Bill Kristol, really. Although he gave Bill Kristol’s grotesque support of Biden’s equally grotesque HR1 bill a mild “eh, I may not agree with everything Bill says” dismissal. And this, from the guy who wrote liberal fascism, which was about exactly how those sorts of things lead to fascism . . . that is weird.


      • Clearly. He is in no sense for limited government now!

        But lots of them aren’t. They want their more “reasonable” side in charge of Big Government, ala Dubya. But most of the limited government conservatives seem to be among the voters. Mockery over tea parties exclaiming about how the government better leave their damned hands of “my social security” aside.


  2. Like

  3. Funny as hell, but will never make SNL:


  4. Worth noting since it was unanimous.

    “Supreme Court sides with man who said police illegally seized firearms from his home without a warrant

    By Ariane de Vogue and Devan Cole, CNN

    Updated 11:30 AM ET, Mon May 17, 2021”


  5. Virginia Republicans may be getting their act together:


    • Could be. Not sure how helpful Trump will be but just so long as he isn’t urging people not to vote because the system is corrupt . . . that will be a plus for the GOP. 😉


      • He’s not backing another candidate which is key. The party can rally around the nominee and the crazy ones can get marginalized. Without Trump’s backing their base is minimal.


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