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NAR Changes are Here - What You Need to Do

August 16, 2024
Floating
Housing Starts and Permits fell in July, with single-family units taking the biggest hit. Single Family starts fell 14% to 850k units, which should mean tighter supply for the foreseeable future. Multi-family starts rose by 53,000, which coincides with the NAHB rise in future expectations, as builders are starting to feel better about the future because they believe rates will come down.

Stocks are and Mortgage Bonds are rebounding higher so far this morning. The 10-year is back under 3.92% and is trading at 3.86%, which is a good sign.

NAHB Housing Market Index

The August NAHB Housing Market Index, which measures builder confidence, fell two points to 39, which is the lowest level since December and is in contraction below 50. Looking at the internals:

Current Sales: fell 2 points to 44

Future Expectations: rose 1 point to 49

Buyer Traffic: fell 2 points to 25

While builders are still feeling pessimistic, future expectations did rise, as they are seeing the light at the end of the tunnel with rates after the recent data and likelihood of a September cut.

Housing Starts and Permits

Housing Starts and Permits fell in July, with single-family units taking the biggest hit.  Single Family starts fell 14% to 850k units, which is the lowest level since April 2023 and should mean tighter supply for the foreseeable future. The overall level of starts is the lowest since 2019.  Multi-family starts rose by 53,000, which coincides with the NAHB rise in future expectations, as builders are starting to feel better about the future because they believe rates will come down. 

The forward looking indicator, permits, are only at 1.4M which is down 4% from the previous look at means that there is not a ton of building in the pipeline.  We are also seeing a greater fallout of permits to starts than normal, meaning not all of the permits are going to turn into new construction. The number of household formations has fallen to a level pretty close to this, but we anticipate there to be more formations as rates come down, especially with the record amount of individuals 25-25 years old living home with parents and all the pent up demand on the sidelines.

News Next Week

Wednesday:Fed Minutes, Jackson Hole Fed Meeting starts, 20-year Bond Auction

Thursday: Existing Home Sales

Friday: New Home Sales

Technical Analysis

Mortgage Bonds are rebounding this morning after holding at support at 100.35. Bonds now have a lot of room to the upside until reaching resistance at 101.18. 

The 10-year tested resistance at 3.92%, which held, and yields are now headed lower once again. There is a lot of room for yields to improve until reaching 3.66%.

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