Sunday , October 24 2021
Home / Hale Stewart: Bonddad Blog / August housing construction shows stabilization, following interest rate moderation

August housing construction shows stabilization, following interest rate moderation

Summary:
- by New Deal democratThis morning’s report on August housing permits and starts shows that the stabilizing of mortgage rates in the past few months has now stabilized housing construction.Housing starts increased 3.9% m/m, and total permits increased 6.0%. The less volatile single family permits increased 0.6%. As a result, the overall trend for all three metrics for the past several months is sideways:Last month I noted that the YoY comparisons were going to become much more challenging, given the boom in construction late last year. With the stabilization of construction, both measures of permits as well as starts remained above their levels of one year ago:Normally I show the changes in mortgage interest rates YoY and compare them with housing construction. This month let me show you

Topics:
[email protected] (New Deal democrat) considers the following as important:

This could be interesting, too:

Calculated Risk writes Real Estate Newsletter Articles this Week

[email protected] (New Deal democrat) writes Weekly Indicators for October 18 – 22 at Seeking Alpha

Martin Choi writes China will set up a property tax pilot plan, taking small steps after years of dithering to tame home prices for common prosperity

Calculated Risk writes Schedule for Week of October 24, 2021

 - by New Deal democrat

This morning’s report on August housing permits and starts shows that the stabilizing of mortgage rates in the past few months has now stabilized housing construction.


Housing starts increased 3.9% m/m, and total permits increased 6.0%. The less volatile single family permits increased 0.6%. As a result, the overall trend for all three metrics for the past several months is sideways:

August housing construction shows stabilization, following interest rate moderation

Last month I noted that the YoY comparisons were going to become much more challenging, given the boom in construction late last year. With the stabilization of construction, both measures of permits as well as starts remained above their levels of one year ago:

August housing construction shows stabilization, following interest rate moderation

Normally I show the changes in mortgage interest rates YoY and compare them with housing construction. This month let me show you the raw mortgage interest rate number (gold), left scale vs. the absolute number of single family permits (right scale):

August housing construction shows stabilization, following interest rate moderation

As mortgage rates declined from 3.7% to 2.7% throughout 2020, single family housing permits increased over 30% from roughly 950,000 annualized to 1,270,000. After the increase early this year in mortgage rates to 3.2%, housing cooled, but in the past 4 months rates have settled in the 2.85%-3.0% range, and housing can be expected to resume a moderate increasing trend in response. This in turn suggests that the economy, which tends to follow housing with a 1 year+ lag, after a period of cooling early next year, will also stabilize later on.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.