The Mist! US Housing Starts Plunge Under Rising Interest Rates (Hurricanes Florence and Jerome)

There is little doubt that Federal Reserve policies have resulted in mispriced risk and massive distortions in the economy. Fed Chairs Bernanke and Yellen were masters of distortion (keeping rates too low for too long) while Fed Chair Powell (Hurricane Jerome) is raising rates rapidly in the face of little-to-no inflation. Throw in Hurricane Florence and we have “The Mist” where fear changes everything.

Housing starts for September were released yesterday and, as expected, the numbers were down across the board (except for the West where it is seemingly always sunny).


1-unit starts (aka, single family detached) are still below 2000 levels thanks, in part, to The Federal Reserve dropping their target rate like a hammer to 1%. We got a massive construction response. That blew up, so The Fed dropped their target rate like a hammer … again from which Hurricane Jerome is only recently begun raising.


But it is with multifamily (5+ unit starts) that Fed rate increases are being daunting.


In a sense, The Fed destroyed the single family detached housing market (along with other misguided Federal programs) and now The Fed is applying its mist to the multifamily market.


Courtesy of the great Jesse’s Cafe Americain!

Homebuilder Stocks Decline As Fed Hikes Interest Rates And Unwinds (Rez Construction Spending Growth Declining)

The bloom is off the rose for homebuilders. Yes, it had been a great run, fueled by The Fed’s zero-interest rate policy (ZIRP) and asset purchases (QE). But despite a roaring economy, SPDR S&P Homebuilders ETF have been falling since January as The Federal Reserve Open Market Committee (FOMC) sticks to their guns and keeps normalizing interest rates.


Yes, the Fed Dots Plot project indicates that there is still upside momentum to short-term interest rates.


And the Fed’s System Open Market Accounts (SOMA) show a declining inventory of Treasury Notes and Bonds to let mature.


So, let’s put on some groovy pants, put on Iron Butterfly, and chill.



Sunset? Pending Home Sales Tank 2.5% YoY As Mortgage Rates Continue To Rise (West Gets Pummeled)

Sunset on the sage?

Pending home sales for August fell 2.5% YoY as mortgage rates continue to rise.


The worst hit? The West! High prices combined with rising mortgage rates are bad for the Golden State. Not to mention Governor Jerry Brown’s insane policies.


Is it Sunset on the sage for The Golden West?