Bidenomics? US Housing Starts UP 6% YoY, But Building Permits Stagnate In July As Mortgage Rates Topped 7% (MBA Purchase Demand Down -26% YoY, Down -2% WoW)

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“Ice Cream Joe” Biden is at Lake Tahoe for a week, probably to avoid being asked questions about his tin-ear respoonse to the tragic Maui fires that have killed 106 people so far. Instead, Joe is inappropriately chuckling (showing he doesn’t care!) and taking photo ops of him eating ice cream. The Biden administration angered a lot of people when it was announced that households that have been affected by the fires would only be getting a one time emergency aid payment of $700 while he gives billions for Ukraine.

After last month’s surprisingly large declines, Housing Starts and Building Permits were expected to rebound modestly in July data released today (still losing altitude from May’s major surge).

At least housing starts were up 6% year-over-year (YoY).

However, the picture was more mixed with starts rising 3.9% MoM (vs +1.1% exp), but that was impacted by a notable downward revision in June (from -8.0% to -11.7%). Building Permits rose just 0.1% MoM (well below the 1.5% MoM expected).

On a SAAR basis, Permits disappointed (1.442mm vs 1.463mm exp) while Starts were in line at 1.452mm (up from a significantly downwardly-revised 1.398mm in June).

Source: Bloomberg

On the Permits side, single-family rose as multi-family fell:

  • Single-family up to 930K from 924K, highest since June 2022
  • Multi-family down to 464K from 465K, lowest since Oct 2020

July Housing Starts data followed the same trajectory with rental units growth underperforming single-family:

  • single-family housing up 6.7% to 983K, up from 921K, highest since May
  • multi-family housing unch at 460K, tied for lowest since July 2022

Additionally, we note that while Housing Starts and Completions remain well off their 2022 highs, Construction Jobs remain very close to those highs…

Source: Bloomberg

Finally, we note that Mortgage Bankers Association data released earlier this morning showed applications for home purchases dropped again last week (back near 1996 lows) as the contract rate on a 30-year fixed mortgage surged above 7% (highest since Dec 2001).

Source: Bloomberg

This won’t end well.

Speaking of not ending well, mortgage applications decreased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 11, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week and was 35 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 26 percent lower than the same week one year ago.

Published by confoundedinterest17

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