Morning Report: Housing starts disappoint

Vital Statistics:

S&P futures4,2372.8
Oil (WTI)72.320.24
10 year government bond yield 1.49%
30 year fixed rate mortgage 3.14%

Stocks are flat as we await the FOMC decision. Bonds and MBS are flat.

The FOMC decision will be released at noon today. The markets will be listening for language pointing towards an end of MBS and Treasury purchases as well as the dot plot. I also think markets will be sensitive to how the Fed describes the state of the economy. Finally, I hope they discuss what is driving the current labor shortage and offer up a reasonable explanation for it.

Speaking of disappointing economic data, housing starts came in below expectations. Starts came in at 1.57 million, while permits came in at 1.68 million. Starts were more or less flat with April, while permits showed a small uptick. Labor and materials shortages are probably behind the disappointing numbers. That said, homebuilder sentiment remains elevated, despite challenges with input costs and labor.

Mortgage applications rose 4.2% last week as purchases increased 2% and refis rose 6%. Rates have been coming back down, which is increasing refi opportunities. “U.S. Treasury yields have slid because of the uncertainty in the financial markets regarding inflation and how the Federal Reserve may act over the next few months,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Purchase activity also rebounded, even as supply constraints continue to slow the housing market. An almost 5 percent increase in government purchase applications drove most of last week’s gain while also tempering the recent growth in loan sizes. Purchase applications were still down 17 percent from a year ago, which was when the mortgage market started seeing large post-shutdown increases in activity.”

Note that NAR believes we have a 5.5 million unit gap in housing demand versus supply.

Mortgage credit availability rose in May, according to the MBA. “Mortgage credit availability in May increased to its highest level since near the start of the pandemic, but still remained at 2014 levels. The increase was driven by a 3 percent gain in the conventional segment of the market, with a rise in the supply of ARMs and cash-out refinances. This is consistent with the uptick in mortgage rates and a slowing refinance market, as well as MBA’s Weekly Applications Survey data showing increased interest in ARMs,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The jumbo index jumped 5 percent last month, but even with increases over the past two months, the index is still around half of where it was in February 2020. A rapidly improving economy and job market has freed up jumbo credit, as banks have deposits to utilize. However, there is still plenty of restraint, as many sectors have not fully returned to pre-pandemic capacity, and there are around 2 million borrowers still in forbearance.” 

58 Responses

    • In one sense I agree that Ashli Babbitt has no one to blame but herself. I’m not the brightest bulb and even I would guess that there was a fairly significant probability of things going sideways if I climbed through a just broken window in the capitol building, even if amongst a bunch of mostly peaceful rioters. Ideally she wouldn’t have died–but, also, ideally she would have had priorities other than what had been trending on Parler or Gab or whatever ahead of the inevitable inauguration of Joe Biden.

      That being said: the hypocrisy is astounding. And the logical disconnects.

      Monday night on Tucker Carlson, Aaron Babbitt demanded the name and identification of the Capitol officer who shot his wife, Ashli Babbitt. There is no denying by anyone—including Fox News—that Ashli Babbitt was shot while trying to enter into the lobby in front of the speaker’s office via a smashed window. There is no denying she was part of an imminent threat. While Carlson and others scream about her defense and in her support, they do so with videos showing her deranged attack inside of the Capitol, elevating the act of a terrorist.

      What’s wrong with letting folks know who the officer was? Why not have him go through a kind of “review and clearance” in the public eye as would be demanded for any cop shooting, say, a girl that was about to stab someone with a knife, or a drug addict who had just tried to pass counterfeit money and then had apparently eaten on the drugs on his person–or, you know, any criminal with a long history of violent crime and catch-and-release that then got shot while going for a weapon or resisting arrest.

      Those people wouldn’t take that position–and they don’t–for any criminal that’s not overtly conservative who gets shot while about to actually do something violent, in the middle of doing something actual violent, etc.

      Also There is no denying she was part of an imminent threat.

      Sure there is. The lack of people to use words or exercise even the most limited pedantry is astounding to me. There is “denying” of almost anything, even obvious truths. But there’s also no indication she was an imminent threat. Or, a threat beyond being about to take selfies of herself and friends and possibly say something rude about Nancy Pelosi while doing it. She may have been LARPing a bit. Maybe thought they were going to confront Mike Pence directly. Whatever.

      Ultimately, Ashli Babbit brought her fate on herself by being there and doing what she did even if her intentions weren’t particularly bad or ignoble or to do anything dangerous. By the same argument, anybody who resists arrest and especially goes for a weapon or is brandishing a weapon from an AK-47 to a penknife in front of a police officer . . . they are potentially bringing their own fate on them as well. And I don’t understand the argument that says in one case: oh, she totally deserved it and in the other THEY MURDERED AN INNOCENT SAINT AND SCHOLAR!!

      Also has this tweet, which is a great demonstration of the cognitive dissonance inherent in the “My Side Always Right” orientation:

      So is BrooklynDad arguing that everybody should have just complied? Or that Ashli Babbit was right for not complying and the same attention should be had?

      This seems universal and constant–no statement over “should citizens comply and be respectful of law officers and seek redress through legitimate and established means or not”. It’s just a complaint that “conservatives” believe criminals should be held responsible when resisting arrest but don’t when a conservative white person is breaking into a building.

      Of course I don’t think I’ve heard anyone of any bent actually suggest that complying with peace officers should only be done by black people or required from black people. I only hear leftists proposing these strawmen scenarios with masturbatory gleed.

      But I will concede in the whataboutism arena, there seems to be a lot of “I support this when my side does it but not when the other side does it!” on both right and left–and then often the pointing out of said hypocrisy. Rather than a debate as to whether there is a true principle there, whether something is good or bad no matter what team jersey the person doing it is wearing.

      Ah well.


      • No rational person thinks the shooting was justified and the shooter should be terminated for just blindly firing into a crowd. There was a Capital police officer standing right next to that dumb broad when she was shot. This dude’s a liability.


  1. Senate votes to make Juneteenth a Federal Holiday.

    Everyone in the financial system is wondering if Friday is now a bank holiday.

    Liked by 1 person

    • So, mortgage industry, Whaaaaaaaaats happening?

      Liked by 1 person

      • I loved that show. The best was when Rerun joined the cult.!!

        Liked by 1 person

        • I was referring to this

          Every mortgage closing on Friday will have to be re-disclosed.


        • I don’t think it will be signed in time to take effect on Friday. The House still has to pass it.


        • I hope not.


        • What’s Happening is a show I probably saw every episode of and remember almost none of it. That’s true of most shows I watched as a kid (Charlie’s Angels, Chico and the Man). Those I watched again when I was older I have more memories of specific episodes and arcs, such as Bewitched, I Dream of Jeanie, I Love Lucy . . . but other shows like My Three Sons–which I watched every morning for like two years, probably more–I don’t think I could tell you the plot of a single episode.

          Another show I’ve probably seen almost every episode of–now 30/40 years ago–was The Addams Family. Loved that show. Can’t really remember any specific plot of any episode.

          Have much better recall of the Twilight Zone–which I know I’ve seen all of. But to be fair I watched it a lot well into high school and have watched a large number of episodes even as an adult, and read the Twilight Zone Companion cover to cover so . . . that’s probably why.

          I’ve seen like 3 or 4 episodes of What’s Happening Now but I also don’t remember what was going on in any of them, either.


        • Remember Good Times w/Jimmie Walker? The only episode I remember is from when the mother died. Agree with you on your positions though.

          I do remember highlights from MASH as well as Barney Miller, however. Also the Dukes of Hazard and the A-Team.


        • I remember Good Times! Again, watched a ton of it. I was impressed to find out David Letterman was a writer on that show. And Jay Leno. White people, white people everywhere.

          I remember when JJ painted Black Jesus. When James died (I thought Florence was there for the run of the show–and they actually had wanted to keep Jon Amos on the show, but it didn’t happen, I think–anyway, nobody was happy about it so they made James’s death a Very Special Episode).

          I think someone was molesting Penny in an episode (a young Janet Jackson!).

          But man, I couldn’t tell you anything about a single episode of Chico and the Man and I’m pretty much sure I saw all of them.

          Remember several Dukes of Hazard episodes. But not as many as I should, considering how much of it I watched. I didn’t really watch the A-Team so I wouldn’t have any idea there. I watched MASH on and off from like elementary school to college, so I recollect a lot of them. Frank leaving, Colonel Blake dying, a very special Alan Alda episode or two, the arrival of Major Winchester, the leaving of Trapper John (and the weird spin off of Trapper John MD–where the pilot is full of mentions of Hawkeye and Hot Lips for no clear reason and then I don’t think they mention the Korean war again during the entire run of the show).

          I may remember more Barney Miller shows that most of them if I try. Loved the one where Ron Glass made a porno movie and showed it to the other cops and there was no porn in it.

          Great cast and great writing on that show. I oughta rewatch sometime. It was good stuff.

          WKRP in Cincinatti. I remember a lot of those shows, but especially the thanksgiving show. Another well written show with a great cast.

          Threes Company. Stupid comedy that was actually pretty smart. Ah, those were the days.


    • Soon enough. I wonder at what point we will have truly achieved Holiday Equity. I think MLK day is going to have to be taken off the progressive/minority ledger and moved over to the conservative/white ledger as there isn’t much MLK fought for that would be supported by modern progressives and critical race theorists.

      Juneteenth commemorates a racist massacre. Which says something about the focus. I’ve got to imagine there will soon be a new July 4th based on whatever the critical day the slaves were first brought ashore in 1619, and perhaps other 1619 holidays memorializing the creation of the White Supremacists United States of AmeriKKKa.

      All the KKK really had to do to take over the country and get everything they want was get PhD.s and couch all their barbaric racism in academic rhetoric. Who knew?

      Which is reading too much into a new federal holiday, but still.


      • “Juneteenth commemorates a racist massacre.”

        No it doesn’t.


        • My bad. Conflated it in my head and also probably early onset dementia.

          Well, you learn something new you will probably forget tomorrow every day.


        • Someone once told me that everything you believe to be true will probably be proven wrong at some point in the distant future.


        • Most everything we know is probably wrong. I see too many people too sure of things that are obviously not true to be overly confident in my own accuracy. There but for the grace of God go I, and so on.

          A big problem is thinking I know something well enough that there’s no need to check on my vague impressions of the thing before I opine . . . I’d make a bad pundit.


      • Juneteenth actually celebrates Union officers arriving in Galveston to announce that the slaves were now free (Lee had surrendered). It’s actually been a thing in Texas for a while. Are you conflating Junteenth with the Tulsa riots?


        • Definitely. Because I never heard of Juneteenth before last year and always in the context of the Tulsa riots. And didn’t care enough to look it up because I hate holidays of all kinds.

          But now that seems wrong. Juneteenth is actually celebrating mostly white military men arriving in Galveston? White supremacy strikes again, if you ask me.


        • Exactly.


  2. Powell cites unemployment insurance as a contributor to the low labor force participation rate.

    The left is going to go apeshit over that.

    Odds he is forced to apologize for it?


    • Will be interested to see but there is a point for all these folks where it becomes different pretending that something they know very well is real is not . . . it’s one thing to pretend things that are marginal, or difficult to prove, or have millions of inputs have imaginary causes and solutions.

      It’s different to pretend that something almost everyone thinks–and certainly almost everyone in your profession that you’d ever want to work with, or whose respect you might want–is caused by X has nothing to do with X.

      I’m guessing he doesn’t apologize but doesn’t emphasize it and it goes away–and so does a lot of direct cash payments to the public without any real discussion about it.


    • When he does the media will praise how he’s working with the White House. If a Fed Chairman agreed with Trump there’d be an infinite number of Congressional hearings about how Fed independence has been destroyed.

      And then an impeachment over it.

      Liked by 1 person

  3. Like

    • Biden just now to reporters: You’re the brightest people in the country.

      That’s just gross and so over-the-top entitled that I don’t care what Biden said. That’s like that meme with the dog:

      Trump didn’t say it because–for all his many, many, many flaws–he wasn’t a sycohpant kissing up to the press. He didn’t considered the press the 4th estate (but really the first estate) the way members of the press do.

      There is such a bizarre “Finally! Somebody realizes we are the brightest people in the country, as we have always realized.” Pauses. “But he didn’t make it clear we are more important than other people–all other people. So he still has some room to grow.”


    • pusillanimous stenographers.

      Liked by 1 person

  4. @ Brent:
    “Labor and materials shortages are probably behind the disappointing numbers.”

    I wonder if lines of credit for homebuilders have liberalized fast enough to permit the purchasing of materials for non custom tract homes at the hoped for volume levels.
    @ Kevin: Just recognizing the breaking and entry into the Capitol as felony burglary would have resolved all this inquiry into political motives as irrelevant. The facts would then speak for themselves regardless of the testimony of the burglars.


    • Ideally, it would be treated as consistent with the crimes committed. And throw the book at them for those crimes, make the point. But still it shouldn’t be treated like any other similar crime, not “different” because they were trying to storm the ruling class’s palace.

      Same for the shooting of Ashli Babbit. Officer might could have been relieved of duty for being trigger-happy but otherwise it would and should be understood that Ashli Babbit was shot in the commission of a felony, that she was doing something that she should not have been and we have all reasonable expectation that she knew she should not have been.

      Sorry she’s dead, she looked like she’s was full of piss and vinegar. Damn waste. But also, don’t go trespassing in the capitol through a broken window while there’s a lot of “mob action” occuring.


    • Mark, I don’t think it is a credit issue. High raw materials pricing have homebuilders pushing the envelope of affordability. Most chose to wait it out.


      • Makes sense for the big builders but small local guys cannot afford to wait it out in my experience. So i was guessing credit limits may be stifling them.

        Of course you do not have a break down as to whether this is a function of only the big guys not building or whether your four houses a year guys are stuck in neutral.


        • skilled labor is another constraint


        • Always has been. And, you know, hiring people who actually intend to labor is also a challenge.

          My Uncle Don’s construction business struggled for years with hiring. Had to basically keep a private detective on the payroll to go after all the people faking injuries, faking much worse injuries than received, or injuring themselves intentionally to get on the workman’s comp insurance. It was routine to have someone apply and get “injured” a week or so into the job.


  5. Interesting.

    I’m more interested in procedure code reimbursement rates versus published procedure prices. Knowing the spread would be informative.


  6. While it’s not impervious to theft, at least with paper health records you’re assured a better level of security.

    I keep telling people, there are no secrets.


    • Immediately wrong on two levels. Trump didn’t really push the lab leak theory in any serious way. Not the way he did hydroxychloroquine, for example. Or China being responsible. So finding out it leaked from a lab doesn’t make Trump right about COVID-19. It’s finding out that doing gain of function research in these labs is probably a bad idea.

      It would not be the first virus either known or suspected to escape from a lab.

      The reason that Republicans keep pushing the lab leak theory isn’t because they believe it.

      I realize it’s DailyKos and all such things are opinion but the entire article is written from the perspective of the narrator, the author: he knows what is in everybody’s heart, he can read everybody’s mind, he knows the entire truth of all things like a omniscient god.

      He doesn’t know why different people push or believe different things. He can’t.

      It doesn’t have the maddening ambiguity of the idea that some animal, somewhere, at some time, passed along a version of the virus to some human.

      I literally don’t think, in this case, this is a problem for anyone. If the animal vector had been identified and we knew how it had come around, we’d be bitching about wet markets.


  7. I really think they’d have something with Critical Race Theory that would be both accurate and persuasive, if they’d only make one change:

    Kos dude quotes and explainer, and I will correct the explainer to make it more accurate and broadly appealing:

    Critical race theory is an academic concept that is more than 40 years old. The core idea is that racism is a social construct, and that it is not merely the product of individual bias or prejudice, but also something embedded in legal systems and policies.

    A good example is [redlining] when, in the 1930s, government officials literally drew lines around areas deemed poor financial risks, often explicitly due to the racial economic composition of inhabitants. Banks subsequently refused to offer mortgages to Black poor people in those areas.

    Today, those same patterns of discrimination live on through facially actually race-blind policies, like single-family zoning that prevents the building of affordable housing in advantaged, majority-white-rich neighborhoods and, thus, stymies racial class desegregation efforts.


    • Banks subsequently refused to offer mortgages to Black poor people in those areas.

      The Federal Government refused to insure mortgages in certain areas.


      • And they haven’t been doing “won’t lend to anybody in a particular geographic area” for a long time now, right?


      • The federal government during the Nixon Admin [after the Charlotte-Mecklenburg case was decided] sent main Justice attorneys to sue Austin ISD to do busing to integrate the schools.

        At the same time, two weeks later, the same main Justice lawyers argued that public housing should be built in east Austin, which was then all black and brown. I was on the winning local team of lawyers in both cases, and we beat back the Justice arguments that every single school should be subject to busing while all public housing should be in one place.

        At one point, our federal judge Jack Roberts asked the main Justice lead counsel, during the second case, “Is it your intent that by putting more black and brown people in East Austin that I make a more demanding busing order?” And then he asked if one of the local AUSA’s could take over the argument and make sense of it.

        They recessed on the Govt’s request. The local AUSA did the best he could – he got the Housing Authority witness to say the land in east Austin was cheaper. I knew this was going to happen and I got two real estate developers to testify that they would provide land all around Austin and in Westlake Hills at the same price as the east Austin land – and one of the developers, Emmett Shelton, actually said he would do this to solve the domestic worker shortage in west Austin. That would not be politically correct today and wasn’t then, but it got a big laugh from the judge.

        So Roberts minimized his busing order by refusing to bus any school that was already integrated [that was an argument I researched for the team – the Supremes had said that equitable relief meant the least disruptive remedy and we made it stick that busing into or out of an integrated school could never be “least disruptive” as a remedy for segregation. More than a third of the elementary schools and all the secondary schools were integrated at the time.

        So the Judge used the Junior High districts to divide segregated elementary schools within those zones into early elementary K-3 and late elementary 4-6, so each paired school was integrated but the same group of kids would get to know each other for six years before JHS paired them anyway.

        He then scattered all future public housing projects, often into small townhome/condo looking clusters, all over Austin so that busing was predictably short lived. And then east Austin started yuppifying anyway.


  8. I love this!

    More of this please!


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