Morning Report: Housing starts fall

Vital Statistics:

S&P futures3,919-26.50
Oil (WTI)79.970.47
10 year government bond yield 3.41%
30 year fixed rate mortgage 6.08%

Stocks are lower as investors fret about the state of the economy. Bonds and MBS are up.

Housing starts fell 1.9% MOM and 21.8% YOY to an annualized rate of 1.38 million. This was a touch above expectations. Building Permits fell 1.6% MOM and 29.9% YOY. This is not surprising given how lousy the home purchase market is. KB Home announced that their cancellation rate was so large, they were halting new projects and just working on the backlog.

On the plus side, mortgage rates are down over 1% compared to October – November 0f 2022. Homebuilders are cutting prices as well, which is good news for affordability.

Meanwhile, Elizabeth Warren is agitating for nationwide rent control using the FTC and HUD as levers to cap rents. No legislation required. I don’t think rent control has ever had the effect she wants (increasing supply and lowering costs), but maybe this time will be the charm. So, who wants to build an apartment complex at a 2% cap rate? Bueller?

The labor market remains tight as a drum. Initial Jobless Claims fell to 190,000 last week, which was the lowest level since the late 1960s when we had a military draft. We are seeing more dovishness out of the Fed speakers, as Harker and Logan want to moderate the pace of increases. Meanwhile Bullard and Lester want to keep rates higher for longer.

Here is a chart of initial jobless claims from 1967 – 1970.

Interesting stat out of China: The population fell in 2022. Since population growth is one of the biggest drivers of climate change, this probably takes the doomsday scenarios off the table if it continues a trend. Instead of 30 billion people by 2100, we might only get 10 billion.

8 Responses

  1. FYI Brent:

    “HUD revamps Obama-era discrimination rule in rebuke to Trump

    Senate Banking Chair Sherrod Brown called the proposal “an important step to ensure that we are fulfilling our nation’s commitment to fair housing in all of our communities.”

    By Katy O’Donnell

    01/19/2023 11:31 AM EST

    The Biden administration on Thursday renewed a push to require cities to address patterns of residential segregation, revamping a regulation that former President Donald Trump had scrapped in a bid to woo suburban voters in the 2020 campaign.”


    • I guess Americans do not have a right to live where, and among whom they like.


    • jnc:

      It’s notable how Politico characterizes the presumed motivations of the two sides. When Obama/Biden implement the regulation, it is done “to ensure that state and local governments were meeting their obligation to “affirmatively further fair housing” under the 1968 Fair Housing Act.”

      But when Trump eliminates it, it is “a bid to woo suburban voters in the 2020 campaign”.

      This is why I hate the media.


  2. This should prove interesting:

    “Will the Supreme Court Torpedo the Financial System?

    Conservative justices may soon have to decide how far to go in their assault on the regulatory state.

    Opinion by Aziz Huq
    01/18/2023 04:30 AM EST”


  3. Welp! That leak’s a real head scratcher.

    No mention of questioning Justices, so one of them, my guess Roberts, is obviously the leaker.


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