FOX NEWS
"House GOP attempts to undo Biden’s 'socialist' mortgage rule"
Story by Chase Williams
26 MAY 2023
FIRST ON FOX: House Republicans passed a bill through the House Financial Services Committee this week that, if ultimately enacted by Congress, would undo President Biden’s controversial mortgage rule that has angered conservatives.
The bill, titled the Middle-Class Borrower Protection Act of 2023, would "cancel recent changes made by the Federal Housing Finance Agency to the up-front loan level pricing adjustments charged by Fannie Mae and Freddie Mac for guarantee of single-family mortgages."
The legislation, which passed through committee along party lines Wednesday, was originally introduced by Rep. Warren Davidson, R-OH, an outspoken critic of the rule.
"It really is just a socialist redistribution of wealth."
"It is that simple."
"It's an equity play by the administration," Davidson told Fox Business in an exclusive interview.
The rule has faced fierce pushback from Republicans on Capitol Hill – including Davidson – with members from both chambers of Congress vowing to repeal the changes made by the Federal Housing Finance Agency (FHFA), saying the rule is unfair.
"Why would you punish people by making it more expensive for people that have been most responsible?"
"On the credit score piece, it's not even clear that it only helps people who are poor."
"I mean, there are wealthy people who don't manage their credit well," Davidson pointed out.
"You could have someone who is low income but very responsible, manages a tight budget, pays their bill on time, and they could get hit with a higher fee and subsidize somebody who maybe has plenty of money but just doesn't pay their bills on time," the Ohio congressman added.
Davidson’s bill comes the same week that embattled FHFA Director Sandra L. Thompson appeared before the House Financial Services Committee, with the director facing tough questions from lawmakers.
Thompson defended the proposal on Tuesday, chalking up criticism of the rule to one big misunderstanding – that the media has driven.
"Unfortunately, certain media reports have distorted basic facts by painting an incomplete and misleading picture of these pricing updates," Thompson told lawmakers.
"I want to be very clear on one key point, and one that bears repeating: under the new pricing framework, borrowers with strong credit profiles are not being penalized to benefit borrowers with weaker credit profiles."
"That is simply not true," the FHFA director asserted.
During the same hearing, some Democrats rushed to defend the rule, including the ranking member on the Committee, Rep. Maxine Waters (D-CA).
"My colleagues on the other side of the aisle appear to be more concerned about protecting the wealthy, even if it comes at the expense of those with less intergenerational wealth."
"I for one, support FHA as if it's a base effort to expand across to the American dream of home ownership," Waters stated during her opening remarks.
"Unfortunately, Republicans are continuing to spread misinformation about the new pricing framework and regurgitating alternative facts about what this actually means for borrowers," the California congresswoman charged.
Later during the hearing, Waters accused Republicans of "undermining Biden by undermining America" while defending the FHFA changes.
"These changes will correct for unfair subsidies that have benefited wealthier individuals purchasing lavish vacation homes and investment properties for over a decade," Waters said.
"House Democrats will continue to support policies that help every family live affordably and with dignity, both through housing reforms and cleanly raising the debt ceiling," she added, acknowledging the current debt ceiling debate on Capitol Hill.
It is unclear if Republicans can undo the changes entirely, but Davidson remains optimistic.
"I think it'll get a quick vote on the floor."
"I hope it's not a party line vote but either way, I hope the Senate will take it up."
"If not, I hope we can put it into something that they have to pass," Davidson remarked.
https://www.msn.com/en-us/news/politics ... 3452&ei=31
THE HOUSING MARKET
Re: THE HOUSING MARKET
REUTERS
"US consumer confidence dips to six-month low, labor market views soften"
By Lucia Mutikani
May 30, 2023
Summary
* Consumer confidence index falls to 102.3 in May
* Labor market differential drops to 31.0 from 36.9 in April
* Monthly house prices increase solidly in March
WASHINGTON, May 30 (Reuters) - U.S. consumer confidence slipped to a six-month low in May as Americans' assessment of the labor market softened, but more households planned to purchase motor vehicles and other big-ticket items over the next six months, which could support economic growth this quarter.
The ebb in confidence reported by the Conference Board on Tuesday was concentrated among consumers aged 55 years and older, as well as among households with annual incomes in the $50,000-$99,000 range.
Consumers expected inflation to stabilize at higher levels over the next year.
"Consumer confidence levels are in a holding pattern even if they are saying it isn't quite as easy as it was to get a new job," said Christopher Rupkey, chief economist at FWDBONDS in New York.
"Older Americans were less confident in the future perhaps with talk of budget cuts and the eventual need to rein in entitlement programs like Social Security and Medicare."
The Conference Board's consumer confidence index slipped to 102.3 this month, the lowest level since last November, from an upwardly revised 103.7 in April.
Economists polled by Reuters had expected the index to fall to 99 from the previously reported reading of 101.3.
The cutoff date for the survey, which places more emphasis on the labor market, was May 22.
A fight to raise the government's borrowing cap weighed on the University of Michigan's consumer sentiment measure this month.
President Joe Biden and Republican U.S. House of Representatives Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending in order to prevent a U.S. debt default.
Consumers were less optimistic on the labor market, with the share viewing jobs as "plentiful" falling to the lowest level since April 2021 and the proportion of those saying jobs were "hard to get" rising to a six-month high.
The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, fell to 31.0, the lowest since April 2021, from 36.9 in April, suggesting the labor market was loosening up.
This measure correlates to the unemployment rate from the U.S. Labor Department.
The jobless rate fell back to a 53-year low of 3.4% in April.
The government is scheduled to publish its closely watched employment report for May on Friday.
More timely data like first-time applications for state unemployment benefits suggests the labor market remains tight, but is gradually easing.
"Job growth is slowing," said Jeffrey Roach, chief economist at LPL Financial in North Carolina.
"Investors should expect Friday's job report to reveal emerging cracks in the labor market."
Stocks on Wall Street were mixed.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
HOUSE PRICES RISE
Consumers expected inflation over the next 12 months to average 6.1%, the lowest level since January 2021 and down from 6.2% last month.
Inflation readings have been persistently high, increasing the probability that the Federal Reserve will raise interest rates again next month.
Financial markets saw more than a 60% chance of the U.S. central bank raising its policy rate by another 25 basis points at its June 13-14 meeting, according to CME Group's FedWatch Tool.
Minutes of the Fed's May 2-3 policy meeting, which were published last week, showed policymakers "generally agreed" the need for further rate hikes "had become less certain."
Consumers are not showing signs of drastically pulling back on spending, thanks to strong wage gains.
The share of consumers planning to buy motor vehicles over the next six months increased compared to April.
The proportion intending to buy major appliances including refrigerators, washing machines and television sets rose to a seven-month high.
That suggests consumer spending could support growth this quarter after it accelerated at its fastest pace in nearly two years in the first quarter.
There was a slight increase in the share of consumers planning to buy a house over the next six months.
But the rise in demand could be undercut by a perennial shortage of houses on the market, and potentially drive home prices higher.
Single-family home prices increased solidly on a monthly basis in March, surveys showed on Tuesday.
The S&P CoreLogic Case-Shiller national home price index, covering all nine U.S. census divisions, climbed 0.4% in March after adjusting for seasonal fluctuations.
That followed a 0.3% rise in February.
The inventory of existing homes remains 44% below pre-pandemic levels, according to data from the National Association of Realtors, which also this month reported price rises in roughly half of the country, multiple offers and many homes being sold above list price.
A separate report from the Federal Housing Finance Agency showed monthly house prices rose 0.6% in March after an increase of 0.7% in February.
Prices increased 3.6% in the 12 months through March after an advance of 4.2% in February.
"As inventory remains a challenge in this market, so too will affordability, rocked by stubbornly high prices that aren't looking to move drastically any time soon," said Nicole Bachaud, senior economist at Zillow in Seattle.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao
https://www.reuters.com/markets/us/us-c ... 023-05-30/
"US consumer confidence dips to six-month low, labor market views soften"
By Lucia Mutikani
May 30, 2023
Summary
* Consumer confidence index falls to 102.3 in May
* Labor market differential drops to 31.0 from 36.9 in April
* Monthly house prices increase solidly in March
WASHINGTON, May 30 (Reuters) - U.S. consumer confidence slipped to a six-month low in May as Americans' assessment of the labor market softened, but more households planned to purchase motor vehicles and other big-ticket items over the next six months, which could support economic growth this quarter.
The ebb in confidence reported by the Conference Board on Tuesday was concentrated among consumers aged 55 years and older, as well as among households with annual incomes in the $50,000-$99,000 range.
Consumers expected inflation to stabilize at higher levels over the next year.
"Consumer confidence levels are in a holding pattern even if they are saying it isn't quite as easy as it was to get a new job," said Christopher Rupkey, chief economist at FWDBONDS in New York.
"Older Americans were less confident in the future perhaps with talk of budget cuts and the eventual need to rein in entitlement programs like Social Security and Medicare."
The Conference Board's consumer confidence index slipped to 102.3 this month, the lowest level since last November, from an upwardly revised 103.7 in April.
Economists polled by Reuters had expected the index to fall to 99 from the previously reported reading of 101.3.
The cutoff date for the survey, which places more emphasis on the labor market, was May 22.
A fight to raise the government's borrowing cap weighed on the University of Michigan's consumer sentiment measure this month.
President Joe Biden and Republican U.S. House of Representatives Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending in order to prevent a U.S. debt default.
Consumers were less optimistic on the labor market, with the share viewing jobs as "plentiful" falling to the lowest level since April 2021 and the proportion of those saying jobs were "hard to get" rising to a six-month high.
The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, fell to 31.0, the lowest since April 2021, from 36.9 in April, suggesting the labor market was loosening up.
This measure correlates to the unemployment rate from the U.S. Labor Department.
The jobless rate fell back to a 53-year low of 3.4% in April.
The government is scheduled to publish its closely watched employment report for May on Friday.
More timely data like first-time applications for state unemployment benefits suggests the labor market remains tight, but is gradually easing.
"Job growth is slowing," said Jeffrey Roach, chief economist at LPL Financial in North Carolina.
"Investors should expect Friday's job report to reveal emerging cracks in the labor market."
Stocks on Wall Street were mixed.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
HOUSE PRICES RISE
Consumers expected inflation over the next 12 months to average 6.1%, the lowest level since January 2021 and down from 6.2% last month.
Inflation readings have been persistently high, increasing the probability that the Federal Reserve will raise interest rates again next month.
Financial markets saw more than a 60% chance of the U.S. central bank raising its policy rate by another 25 basis points at its June 13-14 meeting, according to CME Group's FedWatch Tool.
Minutes of the Fed's May 2-3 policy meeting, which were published last week, showed policymakers "generally agreed" the need for further rate hikes "had become less certain."
Consumers are not showing signs of drastically pulling back on spending, thanks to strong wage gains.
The share of consumers planning to buy motor vehicles over the next six months increased compared to April.
The proportion intending to buy major appliances including refrigerators, washing machines and television sets rose to a seven-month high.
That suggests consumer spending could support growth this quarter after it accelerated at its fastest pace in nearly two years in the first quarter.
There was a slight increase in the share of consumers planning to buy a house over the next six months.
But the rise in demand could be undercut by a perennial shortage of houses on the market, and potentially drive home prices higher.
Single-family home prices increased solidly on a monthly basis in March, surveys showed on Tuesday.
The S&P CoreLogic Case-Shiller national home price index, covering all nine U.S. census divisions, climbed 0.4% in March after adjusting for seasonal fluctuations.
That followed a 0.3% rise in February.
The inventory of existing homes remains 44% below pre-pandemic levels, according to data from the National Association of Realtors, which also this month reported price rises in roughly half of the country, multiple offers and many homes being sold above list price.
A separate report from the Federal Housing Finance Agency showed monthly house prices rose 0.6% in March after an increase of 0.7% in February.
Prices increased 3.6% in the 12 months through March after an advance of 4.2% in February.
"As inventory remains a challenge in this market, so too will affordability, rocked by stubbornly high prices that aren't looking to move drastically any time soon," said Nicole Bachaud, senior economist at Zillow in Seattle.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao
https://www.reuters.com/markets/us/us-c ... 023-05-30/
Re: THE HOUSING MARKET
REUTERS
"New US home construction surges by most in 3 decades in May"
Reuters
June 20, 2023
June 20 (Reuters) - Groundbreaking on U.S. single-family homebuilding projects surged in May by the most in more than three decades and permits for future construction also climbed, suggesting the housing market may be turning a corner after getting clobbered by Federal Reserve interest rate hikes.
Still, even with the Fed skipping a rate hike this month for the first time since early 2022, credit conditions remain in the process of tightening, and that could make it challenging for builders heavily reliant on construction and development loans to keep pace with May's rebound in the months ahead.
Indeed, economists noted that multifamily construction projects that had secured financing last year contributed to May's gains and may level off as the year progresses as new financing becomes harder to obtain.
Housing starts rose to a seasonally adjusted annual rate of 1.631 million units last month from April's downwardly revised 1.34 million, the Commerce Department said on Tuesday.
May's rate was the highest since April 2022, which was then the highest since 2006.
The 291,000-unit increase in starts was the most since January 1990, and the 21.7% rise was the largest percentage gain since October 2016.
"While housing starts data tend to be volatile and this figure may be revised down in coming months, the enormity of the increase suggests that builders are broadly expanding operations this summer," Nationwide Senior Economist Ben Ayers said in a note.
Starts rose by double-digit margins in the South, Midwest and West while declining by nearly 19% in the Northeast.
Single-family starts were up 18.5% with multi-family projects of five units or more climbing 28.1%.
Not all economists were convinced May's upswing represented the start of a continued surge.
"The strength is so far off trend that it calls sustainability into question," Jefferies U.S. economist Thomas Simons wrote.
He noted the nearly 67% surge in starts in the Midwest, for instance, may be the product of rebuilding efforts after a damaging spring tornado season, which is unlikely to be repeated.
The housing market has taken the biggest hit from the Fed's fastest monetary policy tightening campaign since the 1980s, but recent data have suggested the worst may have passed.
A survey on Monday showed the National Association of Home Builders/Wells Fargo Housing Market index in June rose above the midpoint mark of 50 for the first time since July 2022 as a dearth of previously owned homes supported new construction.
The index has rebounded by 77% since December.
The average rate on the popular 30-year fixed mortgage has come down somewhat from last November's high above 7%.
It averaged 6.77% in the latest week, according to data from the Mortgage Bankers Association.
But tightening credit conditions could make it harder for builders to access funding for new projects, a prospect NAHB's chief addressed alongside the association's data release on Monday.
"(A)ccess for builder and developer loans has become more difficult to obtain over the last year, which will ultimately result in lower lot supplies as the industry tries to expand off cycle lows," NAHB Chairman Alicia Huey said in a statement.
After lifting rates by 5 percentage points since March 2022, the Fed this month took a breather to assess the effects of its actions taken so far, though rate hikes are likely to resume next month with inflation still too high.
Nonetheless, most Fed officials see only one or two more quarter-point rate hikes as necessary, and businesses in rate-sensitive sectors like housing are showing signs of upward momentum as a result.
Permits for future construction, for instance, rose 5.2% to the highest since October at 1.491 million units, led by a 27.1% surge in the Northeast.
Permits for single-family projects rose 4.8% while multi-family were up 7.8%.
Bill Adams, chief economist at Comerica Bank, said home construction is set to add to U.S. economic growth in the second half of this year.
Residential construction has been a drag on gross domestic product growth for eight quarters in a row.
Reporting by Dan Burns; Editing by Conor Humphries and Andrea Ricci
https://www.reuters.com/markets/us/us-h ... 023-06-20/
"New US home construction surges by most in 3 decades in May"
Reuters
June 20, 2023
June 20 (Reuters) - Groundbreaking on U.S. single-family homebuilding projects surged in May by the most in more than three decades and permits for future construction also climbed, suggesting the housing market may be turning a corner after getting clobbered by Federal Reserve interest rate hikes.
Still, even with the Fed skipping a rate hike this month for the first time since early 2022, credit conditions remain in the process of tightening, and that could make it challenging for builders heavily reliant on construction and development loans to keep pace with May's rebound in the months ahead.
Indeed, economists noted that multifamily construction projects that had secured financing last year contributed to May's gains and may level off as the year progresses as new financing becomes harder to obtain.
Housing starts rose to a seasonally adjusted annual rate of 1.631 million units last month from April's downwardly revised 1.34 million, the Commerce Department said on Tuesday.
May's rate was the highest since April 2022, which was then the highest since 2006.
The 291,000-unit increase in starts was the most since January 1990, and the 21.7% rise was the largest percentage gain since October 2016.
"While housing starts data tend to be volatile and this figure may be revised down in coming months, the enormity of the increase suggests that builders are broadly expanding operations this summer," Nationwide Senior Economist Ben Ayers said in a note.
Starts rose by double-digit margins in the South, Midwest and West while declining by nearly 19% in the Northeast.
Single-family starts were up 18.5% with multi-family projects of five units or more climbing 28.1%.
Not all economists were convinced May's upswing represented the start of a continued surge.
"The strength is so far off trend that it calls sustainability into question," Jefferies U.S. economist Thomas Simons wrote.
He noted the nearly 67% surge in starts in the Midwest, for instance, may be the product of rebuilding efforts after a damaging spring tornado season, which is unlikely to be repeated.
The housing market has taken the biggest hit from the Fed's fastest monetary policy tightening campaign since the 1980s, but recent data have suggested the worst may have passed.
A survey on Monday showed the National Association of Home Builders/Wells Fargo Housing Market index in June rose above the midpoint mark of 50 for the first time since July 2022 as a dearth of previously owned homes supported new construction.
The index has rebounded by 77% since December.
The average rate on the popular 30-year fixed mortgage has come down somewhat from last November's high above 7%.
It averaged 6.77% in the latest week, according to data from the Mortgage Bankers Association.
But tightening credit conditions could make it harder for builders to access funding for new projects, a prospect NAHB's chief addressed alongside the association's data release on Monday.
"(A)ccess for builder and developer loans has become more difficult to obtain over the last year, which will ultimately result in lower lot supplies as the industry tries to expand off cycle lows," NAHB Chairman Alicia Huey said in a statement.
After lifting rates by 5 percentage points since March 2022, the Fed this month took a breather to assess the effects of its actions taken so far, though rate hikes are likely to resume next month with inflation still too high.
Nonetheless, most Fed officials see only one or two more quarter-point rate hikes as necessary, and businesses in rate-sensitive sectors like housing are showing signs of upward momentum as a result.
Permits for future construction, for instance, rose 5.2% to the highest since October at 1.491 million units, led by a 27.1% surge in the Northeast.
Permits for single-family projects rose 4.8% while multi-family were up 7.8%.
Bill Adams, chief economist at Comerica Bank, said home construction is set to add to U.S. economic growth in the second half of this year.
Residential construction has been a drag on gross domestic product growth for eight quarters in a row.
Reporting by Dan Burns; Editing by Conor Humphries and Andrea Ricci
https://www.reuters.com/markets/us/us-h ... 023-06-20/
Re: THE HOUSING MARKET
REUTERS
"US consumer confidence races to 17-month high; housing market regaining strength"
By Lucia Mutikani
June 27, 2023
Summary
* Consumer confidence index increases to 109.7 in June from 102.5
* Core capital goods orders rise 0.7% in May; shipments up 0.2%
* New home sales surge 12.2%; gains across all four regions
* Monthly house prices increase further in April
WASHINGTON, June 27 (Reuters) - U.S. consumer confidence increased in June to the highest level in nearly 1-1/2 years amid renewed labor market optimism, while business spending appeared to hold up in May, indicating the economy remained on solid footing despite fears of a recession.
Hopes that the economy could avoid a downturn in the near-term were also bolstered by other reports on Tuesday signaling a housing market revival was likely underway, with new home sales racing to a 15-month high in May and monthly house prices rising again in April.
The upbeat data, however, suggested the Federal Reserve will likely have to continue raising interest rates to slow demand in the overall economy.
The U.S. central bank, which has raised its policy rate by 500 basis points since March 2022, signaled this month that two additional rate hikes were warranted this year.
"The U.S. economy continues to steadily defy expectations and the fact that it is doing so without lots of hoopla is a good thing," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.
The Conference Board said its consumer confidence index rose to 109.7 this month, the highest reading since January 2022, from 102.5 in May.
Economists polled by Reuters had expected the index to climb to 104.0.
Consumers under the age of 35, and those with an annual income of more than $35,000 were the main drivers of confidence this month.
Consumers, however, continued to expect a recession at some point over the next six to 12 months.
But they grew more upbeat on the labor market, with the share viewing jobs as "plentiful" rising and the proportion of those saying jobs were "hard to get" falling.
The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, rose to 34.4 from 30.7 in May, a sign labor market conditions remain tight despite first-time applications for state unemployment benefits hovering at more than 1-1/2-year highs.
This measure correlates to the unemployment rate in the Labor Department's closely followed employment report.
Though income expectations eased a bit, consumers were generally optimistic about family finances.
"This might reflect consumers' belief that labor market conditions will remain favorable and that there will be further declines in inflation ahead," said Dana Peterson, chief economist at The Conference Board in Washington.
Consumers' 12-month inflation expectations dipped to 6.0%, the lowest reading since December 2020, from 6.1% last month.
The improvement in confidence mirrored the University of Michigan's sentiment survey.
But consumers' buying plans softened, with fewer households intending to purchase motor vehicles, major appliances and houses over the next six months.
Vacation was also not on many consumers' minds.
But economists cautioned there was no strong correlation between buying plans and consumer spending.
U.S. stocks were trading higher.
The dollar slipped against a basket of currencies.
U.S. Treasury prices fell.
FLOOR FOR HOUSING
The run of positive economic news was extended by a separate report from the Commerce Department showing orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.7% in May.
The rise in orders for these so-called core capital goods handily beat economists' expectations for them to be unchanged.
Though a downward revision to April's increase to 0.6% from 1.3% took some of the shine from the data, business spending was holding up despite the pain from higher borrowing costs.
There were notable increases in orders for electrical equipment, appliances and components as well as machinery.
Shipments of core capital goods gained 0.2% in May after climbing 0.4% in April.
Nondefense capital goods shipments including aircraft surged 3.4%.
These feed into the calculation of equipment spending in the gross domestic product measurement.
Business spending on equipment has declined for two straight quarters, the first back-to-back decline since 2020.
"We may not be out of the woods yet, but back-to-back gains in core capital goods orders more broadly point to a potential bottoming out in spending and upside for second-quarter equipment spending," said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.
The housing market appears to have found a floor and could even be recovering.
A third report from the Commerce Department showed new home sales jumped 12.2% to a seasonally adjusted annual rate of 763,000 units last month, the highest level since February 2022, benefiting from a dearth of previously owned homes available for sale.
Economists had forecast new home sales, which account for a small share of U.S. home sales, slipping to a rate of 675,000 units.
Sales shot up 20.0% on a year-on-year basis in May.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
While new home sales can be volatile on a month-to-month basis, they added to data last week showing homebuilder confidence positive in June for the first time in 11 months.
Housing starts surged in May and home resales edged up.
A fourth report from the Federal Housing Finance Agency showed monthly house prices rising 0.7% in April after gaining 0.5% in March.
Prices increased 3.1% in the 12 months through April after advancing 3.7% in March.
"Strength in housing suggests risks for the Fed's goal of a return to 2% inflation over the medium term," said Veronica Clark, an economist at Citigroup in New York.
"Housing strength over the summer also supports our base case of further rate hikes sooner rather than later."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 023-06-27/
"US consumer confidence races to 17-month high; housing market regaining strength"
By Lucia Mutikani
June 27, 2023
Summary
* Consumer confidence index increases to 109.7 in June from 102.5
* Core capital goods orders rise 0.7% in May; shipments up 0.2%
* New home sales surge 12.2%; gains across all four regions
* Monthly house prices increase further in April
WASHINGTON, June 27 (Reuters) - U.S. consumer confidence increased in June to the highest level in nearly 1-1/2 years amid renewed labor market optimism, while business spending appeared to hold up in May, indicating the economy remained on solid footing despite fears of a recession.
Hopes that the economy could avoid a downturn in the near-term were also bolstered by other reports on Tuesday signaling a housing market revival was likely underway, with new home sales racing to a 15-month high in May and monthly house prices rising again in April.
The upbeat data, however, suggested the Federal Reserve will likely have to continue raising interest rates to slow demand in the overall economy.
The U.S. central bank, which has raised its policy rate by 500 basis points since March 2022, signaled this month that two additional rate hikes were warranted this year.
"The U.S. economy continues to steadily defy expectations and the fact that it is doing so without lots of hoopla is a good thing," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.
The Conference Board said its consumer confidence index rose to 109.7 this month, the highest reading since January 2022, from 102.5 in May.
Economists polled by Reuters had expected the index to climb to 104.0.
Consumers under the age of 35, and those with an annual income of more than $35,000 were the main drivers of confidence this month.
Consumers, however, continued to expect a recession at some point over the next six to 12 months.
But they grew more upbeat on the labor market, with the share viewing jobs as "plentiful" rising and the proportion of those saying jobs were "hard to get" falling.
The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, rose to 34.4 from 30.7 in May, a sign labor market conditions remain tight despite first-time applications for state unemployment benefits hovering at more than 1-1/2-year highs.
This measure correlates to the unemployment rate in the Labor Department's closely followed employment report.
Though income expectations eased a bit, consumers were generally optimistic about family finances.
"This might reflect consumers' belief that labor market conditions will remain favorable and that there will be further declines in inflation ahead," said Dana Peterson, chief economist at The Conference Board in Washington.
Consumers' 12-month inflation expectations dipped to 6.0%, the lowest reading since December 2020, from 6.1% last month.
The improvement in confidence mirrored the University of Michigan's sentiment survey.
But consumers' buying plans softened, with fewer households intending to purchase motor vehicles, major appliances and houses over the next six months.
Vacation was also not on many consumers' minds.
But economists cautioned there was no strong correlation between buying plans and consumer spending.
U.S. stocks were trading higher.
The dollar slipped against a basket of currencies.
U.S. Treasury prices fell.
FLOOR FOR HOUSING
The run of positive economic news was extended by a separate report from the Commerce Department showing orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.7% in May.
The rise in orders for these so-called core capital goods handily beat economists' expectations for them to be unchanged.
Though a downward revision to April's increase to 0.6% from 1.3% took some of the shine from the data, business spending was holding up despite the pain from higher borrowing costs.
There were notable increases in orders for electrical equipment, appliances and components as well as machinery.
Shipments of core capital goods gained 0.2% in May after climbing 0.4% in April.
Nondefense capital goods shipments including aircraft surged 3.4%.
These feed into the calculation of equipment spending in the gross domestic product measurement.
Business spending on equipment has declined for two straight quarters, the first back-to-back decline since 2020.
"We may not be out of the woods yet, but back-to-back gains in core capital goods orders more broadly point to a potential bottoming out in spending and upside for second-quarter equipment spending," said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.
The housing market appears to have found a floor and could even be recovering.
A third report from the Commerce Department showed new home sales jumped 12.2% to a seasonally adjusted annual rate of 763,000 units last month, the highest level since February 2022, benefiting from a dearth of previously owned homes available for sale.
Economists had forecast new home sales, which account for a small share of U.S. home sales, slipping to a rate of 675,000 units.
Sales shot up 20.0% on a year-on-year basis in May.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
While new home sales can be volatile on a month-to-month basis, they added to data last week showing homebuilder confidence positive in June for the first time in 11 months.
Housing starts surged in May and home resales edged up.
A fourth report from the Federal Housing Finance Agency showed monthly house prices rising 0.7% in April after gaining 0.5% in March.
Prices increased 3.1% in the 12 months through April after advancing 3.7% in March.
"Strength in housing suggests risks for the Fed's goal of a return to 2% inflation over the medium term," said Veronica Clark, an economist at Citigroup in New York.
"Housing strength over the summer also supports our base case of further rate hikes sooner rather than later."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 023-06-27/
Re: THE HOUSING MARKET
REUTERS
"US new home sales jump in May; median house price falls"
Reuters
June 27, 2023
WASHINGTON, June 27 (Reuters) - Sales of new U.S. single-family homes surged to the highest level in nearly 1-1/2 years in May, benefiting from a dearth of previously owned homes available for sale.
New home sales jumped 12.2% to a seasonally adjusted annual rate of 763,000 units last month, the highest level since February 2022, the Commerce Department said on Tuesday.
April's sales pace was revised down to 680,000 units from the previously reported 683,000.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, slipping to a rate of 675,000 units.
Sales shot up 20.0% on a year-on-year basis in May.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
The housing market has likely found a floor and could be even improving.
Data last week showed homebuilder confidence rising into positive territory in June for the first time in 11 months.
Housing starts surged in May as supply remains tight, while home resales edged up.
Economists say the signs of revival in the housing market suggested the Federal Reserve would need to keep raising interest rates.
The housing market has been the biggest causality of the U.S. central bank's fastest rate hiking cycle since the 1980s.
The Fed, which has raised its policy rate by 500 basis points since March 2022, has signaled two more rate increases this year to cool demand in the overall economy.
The increase in sales last month was despite mortgage rates resuming their upward trend.
The average rate on the popular 30-year fixed mortgage was higher in May relative to April, rising to 6.57% by the last week of the month, according to data from mortgage finance agency Freddie Mac.
New home sales posted double-digit growth in the Northeast, South and West.
They rose 4.1% in the Midwest.
The median new house price in May was $416,300, a 7.6% drop from a year ago.
There were 428,000 new homes on the market at the end of last month, down from 432,000 in April.
At May's sales pace it would take 6.7 months to clear the supply of houses on the market, down from 7.6 months in April.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-n ... 023-06-27/
"US new home sales jump in May; median house price falls"
Reuters
June 27, 2023
WASHINGTON, June 27 (Reuters) - Sales of new U.S. single-family homes surged to the highest level in nearly 1-1/2 years in May, benefiting from a dearth of previously owned homes available for sale.
New home sales jumped 12.2% to a seasonally adjusted annual rate of 763,000 units last month, the highest level since February 2022, the Commerce Department said on Tuesday.
April's sales pace was revised down to 680,000 units from the previously reported 683,000.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, slipping to a rate of 675,000 units.
Sales shot up 20.0% on a year-on-year basis in May.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
The housing market has likely found a floor and could be even improving.
Data last week showed homebuilder confidence rising into positive territory in June for the first time in 11 months.
Housing starts surged in May as supply remains tight, while home resales edged up.
Economists say the signs of revival in the housing market suggested the Federal Reserve would need to keep raising interest rates.
The housing market has been the biggest causality of the U.S. central bank's fastest rate hiking cycle since the 1980s.
The Fed, which has raised its policy rate by 500 basis points since March 2022, has signaled two more rate increases this year to cool demand in the overall economy.
The increase in sales last month was despite mortgage rates resuming their upward trend.
The average rate on the popular 30-year fixed mortgage was higher in May relative to April, rising to 6.57% by the last week of the month, according to data from mortgage finance agency Freddie Mac.
New home sales posted double-digit growth in the Northeast, South and West.
They rose 4.1% in the Midwest.
The median new house price in May was $416,300, a 7.6% drop from a year ago.
There were 428,000 new homes on the market at the end of last month, down from 432,000 in April.
At May's sales pace it would take 6.7 months to clear the supply of houses on the market, down from 7.6 months in April.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-n ... 023-06-27/
Re: THE HOUSING MARKET
REUTERS
"U.S. mortgage rates rise to 6.81%, highest level this year -Freddie Mac"
By Reuters Staff
JULY 6, 2023
NEW YORK (Reuters) - U.S. 30-year mortgage rates rose to an average of 6.81% this week, the highest level of 2023, according to Freddie Mac’s mortgage market survey.
Mortgage rates have risen sharply in tandem with the Federal Reserve’s aggressive monetary policy stance adopted since last year aimed at curbing inflation.
As a result, the rates climbed to 7.08% in November 2022 - its highest in two decades.
Interest rates on 30-year mortgages - the most popular home loan in the U.S - averaged 6.71% last week.
The rates were at 5.3% a year ago, Freddie Mac data showed.
The yield on the 10-year Treasury note, which acts as a benchmark for mortgage rates, jumped above 4% on Thursday after labor market data stoked interest rate hike concerns.
“This upward trend is being driven by a resilient economy, persistent inflation and a more hawkish tone from the Federal Reserve."
"These high rates combined with low inventory continue to price many potential homebuyers out of the market,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Also on Thursday, the Mortgage Bankers Association (MBA) said its market composite index, which measures the volume of U.S. mortgage applications, fell 4.4% from the prior week amid the uptick in mortgage rates.
Reporting by Chibuike Oguh in New York; Editing by Lance Tupper and Daniel Wallis
https://www.reuters.com/article/usa-eco ... SL1N38S2D6
"U.S. mortgage rates rise to 6.81%, highest level this year -Freddie Mac"
By Reuters Staff
JULY 6, 2023
NEW YORK (Reuters) - U.S. 30-year mortgage rates rose to an average of 6.81% this week, the highest level of 2023, according to Freddie Mac’s mortgage market survey.
Mortgage rates have risen sharply in tandem with the Federal Reserve’s aggressive monetary policy stance adopted since last year aimed at curbing inflation.
As a result, the rates climbed to 7.08% in November 2022 - its highest in two decades.
Interest rates on 30-year mortgages - the most popular home loan in the U.S - averaged 6.71% last week.
The rates were at 5.3% a year ago, Freddie Mac data showed.
The yield on the 10-year Treasury note, which acts as a benchmark for mortgage rates, jumped above 4% on Thursday after labor market data stoked interest rate hike concerns.
“This upward trend is being driven by a resilient economy, persistent inflation and a more hawkish tone from the Federal Reserve."
"These high rates combined with low inventory continue to price many potential homebuyers out of the market,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Also on Thursday, the Mortgage Bankers Association (MBA) said its market composite index, which measures the volume of U.S. mortgage applications, fell 4.4% from the prior week amid the uptick in mortgage rates.
Reporting by Chibuike Oguh in New York; Editing by Lance Tupper and Daniel Wallis
https://www.reuters.com/article/usa-eco ... SL1N38S2D6
Re: THE HOUSING MARKET
REUTERS
"US new home sales fall, but trend remains strong"
By Lucia Mutikani
July 26, 2023
Summary
* New home sales fall 2.5% in June; up 23.8% year-on-year
* Median new house price drops 4.0% year-on-year
WASHINGTON, July 26 (Reuters) - Sales of new U.S. single-family homes fell in June after three straight monthly increases, but the trend remained strong as an acute shortage of previously owned homes underpins demand.
New home sales dropped 2.5% to a seasonally adjusted annual rate of 697,000 units last month, the Commerce Department said on Wednesday.
May's sales pace was revised lower to 715,000 units from the previously reported 763,000 units.
May's sales pace was the highest since February 2022.
"The data remain consistent with and provide further confirmation of a bottoming-out in housing activity, with the three-month average of sales rising in every month since November 2022," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, would drop to a rate of 725,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales increased 23.8% on a year-on-year basis in June.
With the inventory of existing homes near historically low levels and multiple offers on some properties, potential buyers are seeking out new houses, driving up homebuilding.
Many homeowners have mortgage loans with rates below 5%, reducing the incentive to put their houses on the market.
The rate on the popular 30-year fixed mortgage is just under 7%, according to data from the Mortgage Bankers Association.
The shortage is also boosting house prices, which had been in retreat or declining earlier this year as higher mortgage rates pushed buyers to the sidelines.
According to the National Association of Home Builders, fewer builders were offering incentives, including cutting prices to increase sales.
While the overall housing market continues to stabilize, higher mortgage rates and the renewed house price appreciation could delay a recovery.
The Federal Reserve on Wednesday raised its policy by 25 basis points to a 5.25% to 5.50% range.
Stocks on Wall Street closed little changed.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
HOUSING STABILIZING
There are concerns that signs of life in the housing market could compel the Fed to push interest rates even higher, which some economists said would be a mistake.
They argued that there was a huge pipeline of homes still to be completed, especially multi-family housing units.
A recession, accompanied by steep job losses and a surge in mortgage delinquencies, would force some homeowners to put their houses on the market.
These factors could boost supply.
"The current equilibrium that the homebuilders are enjoying may be short-lived," said Richard de Chazal, macro analyst at William Blair.
"Given what we view as an unstable foundation, Chair (Jerome) Powell should be careful about just how much weight he places on this market."
Last month, new home sales jumped 20.6% in the Northeast and 4.3% in the densely populated South.
But they declined 13.9% in the West and tumbled 28.4% in the Midwest.
About a third of the new homes sold last month were in the $300,000 to $399,999 price bracket.
The median new house price in June was $415,400, a 4.0% drop from a year ago.
The average house price was nearly $500,000.
There were 432,000 new homes on the market at the end of last month, up from 429,000 in May.
Houses under construction made up 60.2% of inventory, with those yet to be started accounting for 23.1%.
At June's sales pace it would take 7.4 months to clear the supply of houses on the market, up from 7.2 months in May.
Reporting by Lucia Mutikani; Editing by Andrea Ricci, Paul Simao and Jonathan Oatis
https://www.reuters.com/markets/us/us-n ... 023-07-26/
"US new home sales fall, but trend remains strong"
By Lucia Mutikani
July 26, 2023
Summary
* New home sales fall 2.5% in June; up 23.8% year-on-year
* Median new house price drops 4.0% year-on-year
WASHINGTON, July 26 (Reuters) - Sales of new U.S. single-family homes fell in June after three straight monthly increases, but the trend remained strong as an acute shortage of previously owned homes underpins demand.
New home sales dropped 2.5% to a seasonally adjusted annual rate of 697,000 units last month, the Commerce Department said on Wednesday.
May's sales pace was revised lower to 715,000 units from the previously reported 763,000 units.
May's sales pace was the highest since February 2022.
"The data remain consistent with and provide further confirmation of a bottoming-out in housing activity, with the three-month average of sales rising in every month since November 2022," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, would drop to a rate of 725,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales increased 23.8% on a year-on-year basis in June.
With the inventory of existing homes near historically low levels and multiple offers on some properties, potential buyers are seeking out new houses, driving up homebuilding.
Many homeowners have mortgage loans with rates below 5%, reducing the incentive to put their houses on the market.
The rate on the popular 30-year fixed mortgage is just under 7%, according to data from the Mortgage Bankers Association.
The shortage is also boosting house prices, which had been in retreat or declining earlier this year as higher mortgage rates pushed buyers to the sidelines.
According to the National Association of Home Builders, fewer builders were offering incentives, including cutting prices to increase sales.
While the overall housing market continues to stabilize, higher mortgage rates and the renewed house price appreciation could delay a recovery.
The Federal Reserve on Wednesday raised its policy by 25 basis points to a 5.25% to 5.50% range.
Stocks on Wall Street closed little changed.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
HOUSING STABILIZING
There are concerns that signs of life in the housing market could compel the Fed to push interest rates even higher, which some economists said would be a mistake.
They argued that there was a huge pipeline of homes still to be completed, especially multi-family housing units.
A recession, accompanied by steep job losses and a surge in mortgage delinquencies, would force some homeowners to put their houses on the market.
These factors could boost supply.
"The current equilibrium that the homebuilders are enjoying may be short-lived," said Richard de Chazal, macro analyst at William Blair.
"Given what we view as an unstable foundation, Chair (Jerome) Powell should be careful about just how much weight he places on this market."
Last month, new home sales jumped 20.6% in the Northeast and 4.3% in the densely populated South.
But they declined 13.9% in the West and tumbled 28.4% in the Midwest.
About a third of the new homes sold last month were in the $300,000 to $399,999 price bracket.
The median new house price in June was $415,400, a 4.0% drop from a year ago.
The average house price was nearly $500,000.
There were 432,000 new homes on the market at the end of last month, up from 429,000 in May.
Houses under construction made up 60.2% of inventory, with those yet to be started accounting for 23.1%.
At June's sales pace it would take 7.4 months to clear the supply of houses on the market, up from 7.2 months in May.
Reporting by Lucia Mutikani; Editing by Andrea Ricci, Paul Simao and Jonathan Oatis
https://www.reuters.com/markets/us/us-n ... 023-07-26/
Re: THE HOUSING MARKET
REUTERS
"U.S. consumers saying 'bad time to buy' a house hits 13-year high in July"
By Safiyah Riddle
August 7, 2023
Aug 7 (Reuters) - The share of U.S. consumers who believe it is a bad time to buy a home reached the highest level in at least 13 years in July, according to a survey released on Monday, as the supply of available properties remains scarce and home prices appear to have stopped cooling.
The portion of U.S. consumers saying now is a "bad time to buy" a new home increased by 4 percentage points in July to 82%, according to a report released Monday by Fannie Mae, the highest level since the mortgage finance giant began conducting the survey in 2010.
Consumers' outlook also appears to have taken a hit, with a net 17% of respondents expecting price increases in the next 12 months, the highest percentage in over a year.
The grim perception of the housing market comes as home costs appear to have hit a floor after downward price pressure from the Federal Reserve's 525 basis points worth of interest rate hikes since March 2022.
Persistently high home-buying costs are in large part due to limited housing stock, which has remained at historically low levels.
Many homeowners are now unwilling to buy a new home that would require more expensive financing compared to mortgage costs locked in before the Fed started raising rates.
Willingness to sell was unchanged in July, according to the survey, with 64% of respondents indicating that now was a good time to sell - unchanged from the month prior.
Not all was pessimistic in the report, however, as confidence in the labor market and expected decreases in future mortgage rates pushed the overall Home Purchase Sentiment Index to 66.8, up 4 points year over year and 0.8 points from June.
"While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we'll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability," said Doug Duncan, Fannie Mae senior vice president and chief economist.
Reporting by Safiyah Riddle; Editing by Conor Humphries
https://www.reuters.com/world/uk/us-con ... 023-08-07/
"U.S. consumers saying 'bad time to buy' a house hits 13-year high in July"
By Safiyah Riddle
August 7, 2023
Aug 7 (Reuters) - The share of U.S. consumers who believe it is a bad time to buy a home reached the highest level in at least 13 years in July, according to a survey released on Monday, as the supply of available properties remains scarce and home prices appear to have stopped cooling.
The portion of U.S. consumers saying now is a "bad time to buy" a new home increased by 4 percentage points in July to 82%, according to a report released Monday by Fannie Mae, the highest level since the mortgage finance giant began conducting the survey in 2010.
Consumers' outlook also appears to have taken a hit, with a net 17% of respondents expecting price increases in the next 12 months, the highest percentage in over a year.
The grim perception of the housing market comes as home costs appear to have hit a floor after downward price pressure from the Federal Reserve's 525 basis points worth of interest rate hikes since March 2022.
Persistently high home-buying costs are in large part due to limited housing stock, which has remained at historically low levels.
Many homeowners are now unwilling to buy a new home that would require more expensive financing compared to mortgage costs locked in before the Fed started raising rates.
Willingness to sell was unchanged in July, according to the survey, with 64% of respondents indicating that now was a good time to sell - unchanged from the month prior.
Not all was pessimistic in the report, however, as confidence in the labor market and expected decreases in future mortgage rates pushed the overall Home Purchase Sentiment Index to 66.8, up 4 points year over year and 0.8 points from June.
"While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we'll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability," said Doug Duncan, Fannie Mae senior vice president and chief economist.
Reporting by Safiyah Riddle; Editing by Conor Humphries
https://www.reuters.com/world/uk/us-con ... 023-08-07/
Re: THE HOUSING MARKET
REUTERS
"U.S. mortgage rates spike to highest since November, approach 22-year high"
By Safiyah Riddle
August 9, 2023
Aug 9 (Reuters) - The average U.S. 30-year mortgage rate jumped to a nine-month peak on Wednesday and hit the second-highest rate since 2001, as interest rates reacted sharply to a downgrading of U.S. government debt.
The average 30-year mortgage rate shot up to 7.09% for the week ending Aug. 4, a 16 basis point increase from the previous week's 6.93% rate, according to a weekly report released by the Mortgage Bankers Association.
Rates have not been that high since November 2022, which were then the highest levels since 2001.
Potential borrowers adjusted promptly to the surging cost of borrowing: the mortgage applications index - a measure of total mortgage application volume - fell 3.1% to a six-month low of 194.5.
Joel Kan, the Mortgage Bankers Association's vice president and deputy chief economist, pointed to Fitch's recent downgrading of U.S. government debt, which affected all types of loans on the weekly survey.
Recent data has suggested that the home price cooling engineered by the Federal Reserve's aggressive interest rate hiking campaign could be slowing down.
While demand in the past year has waned, a severely limited housing stock has kept upward pressure on prices.
But the recent data showing higher mortgage rates and crimped demand could be welcome news for overall shelter costs and the U.S. central bank's effort to bring inflation down.
Reporting by Safiyah Riddle; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-m ... 023-08-09/
"U.S. mortgage rates spike to highest since November, approach 22-year high"
By Safiyah Riddle
August 9, 2023
Aug 9 (Reuters) - The average U.S. 30-year mortgage rate jumped to a nine-month peak on Wednesday and hit the second-highest rate since 2001, as interest rates reacted sharply to a downgrading of U.S. government debt.
The average 30-year mortgage rate shot up to 7.09% for the week ending Aug. 4, a 16 basis point increase from the previous week's 6.93% rate, according to a weekly report released by the Mortgage Bankers Association.
Rates have not been that high since November 2022, which were then the highest levels since 2001.
Potential borrowers adjusted promptly to the surging cost of borrowing: the mortgage applications index - a measure of total mortgage application volume - fell 3.1% to a six-month low of 194.5.
Joel Kan, the Mortgage Bankers Association's vice president and deputy chief economist, pointed to Fitch's recent downgrading of U.S. government debt, which affected all types of loans on the weekly survey.
Recent data has suggested that the home price cooling engineered by the Federal Reserve's aggressive interest rate hiking campaign could be slowing down.
While demand in the past year has waned, a severely limited housing stock has kept upward pressure on prices.
But the recent data showing higher mortgage rates and crimped demand could be welcome news for overall shelter costs and the U.S. central bank's effort to bring inflation down.
Reporting by Safiyah Riddle; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-m ... 023-08-09/
Re: THE HOUSING MARKET
REUTERS
"US housing starts surge in boost to economy"
By Lucia Mutikani
August 16, 2023
Summary
* Single-family housing starts increase 6.7% in July
* Single-family building permits rise 0.6%
*Overall housing starts climb 3.9%; permits gain 0.1%
* Manufacturing production increases 0.5%
WASHINGTON, Aug 16 (Reuters) - U.S. single-family homebuilding surged in July and permits for future construction rose amid an acute shortage of previously owned houses, but mortgage rates climbing back to near two-decade highs could slow the housing market improvement.
The sharp rebound in groundbreaking on single-family housing units reported by the Commerce Department on Wednesday was another sign of the economy continuing to defy dire forecasts of a recession.
It followed news on Tuesday that retail sales rose strongly in July, which prompted economists to upgrade their growth estimates for the third quarters.
With inflation retreating, economists did not see the flow of upbeat data leading to another interest rate hike next month.
"Housing generally has shown resilience, but Fed officials may overlook this latest news of strengthening demand in the economy when it comes to judging whether to hike rates again this year because of the progress made on the inflation front," said Christopher Rupkey, chief economist at FWDBONDS in New York.
Single-family housing starts, which account for the bulk of homebuilding, jumped 6.7% to a seasonally adjusted annual rate of 983,000 units last month.
They rose 9.5% year-on-year in July.
The increase in groundbreaking was led by the West, where single-family starts soared 28.5%.
Starts rose 12.5% in the Midwest.
But they fell 3.4% in the Northeast and declined 1.3% in the densely populated South.
After being pummeled by the Federal Reserve's aggressive monetary policy tightening, the housing market has stabilized.
Further improvement, however, looks likely to be curtailed by the renewed increase in mortgage rates.
The average rate on the popular 30-year fixed mortgage has risen to 6.96% over the past weeks, according to latest data from mortgage finance agency Freddie Mac.
The rate is within striking distance of the 7.08% seen in late October and early November, which was the highest since April 2002.
Mortgage rates near 7% were attributed to the ebb in confidence among homebuilders in August, with the National Association of Home Builders saying more builders were offering incentives to attract buyers amid expectations of lower sales.
The Fed has since March 2022 raised its benchmark overnight interest rate by 525 basis points to the current 5.25% to 5.50% range.
Starts for housing projects with five units or more were unchanged at a rate of 460,000 units in July.
Demand for rental accommodation, largely driven by higher mortgage rates sidelining some potential home buyers, is slowing.
There is also a record stock of multi-family housing under construction.
Overall housing starts increased 3.9% to a rate of 1.452 million units in July.
Economists polled by Reuters had forecast starts rising to a rate of 1.448 million units.
"The need for new single-family homes, which is driven by scarce existing home inventory, should keep a floor under single-family construction," said Nancy Vanden Houten, U.S. lead economist at Oxford Economics in New York.
"Homebuilders increased their use of incentives again in August, which may support sales and prevent a steep fall in single-family starts."
Permits for future construction of single-family homes rose 0.6% in July to a rate of 930,000 units.
They have now increased for six straight months and were lifted by rises in the Midwest and South.
Single-family building permits, however, tumbled in the Northeast and were unchanged in the West.
Permits for housing projects with five units or more fell 0.2% to a rate of 464,000 units, the lowest level since October 2020.
Overall building permits edged up 0.1% to a rate of 1.442 million units last month.
Stocks on Wall Street were higher.
The dollar was steady against a basket of currencies.
U.S. Treasury prices rose.
TIGHT SUPPLY
Despite the rise in starts, housing supply is likely to remain tight.
The number of houses approved for construction that are yet to be started fell 0.4% to 277,000 units in July.
The single-family homebuilding backlog dropped 0.7% to 140,000 units, while the completions rate for this segment increased 1.3% a rate of 1.018 million units.
Overall housing completions dropped 11.8% to a rate of 1.321 million units.
The inventory of single-family housing under construction fell 0.7% to a rate of 678,000 units.
The stock of multi-family housing under construction increased 1.1% to 986,000 units, the highest level since the government started tracking the series in 1970.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.
There was encouraging news on the industrial side of the economy, which has been bruised by the U.S. central bank's rate hikes.
Output at factories rebounded 0.5% in July after declining 0.5% in June, the Fed said in a separate report.
The rebound was driven by a 5.2% acceleration in motor vehicle and parts production.
But this partly reflected difficulties adjusting the data for seasonal fluctuations.
Production typically falls in July when automakers idle plants for retooling.
However, the temporary plant closures do not always happen, which could throw off the model that the Fed uses to strip out seasonal fluctuations from the data.
Output at mines rose.
Utilities production soared 5.4% after three straight monthly declines as a heat-wave across many parts of the country increased demand for air conditioning.
As a result, industrial production shot up 1.0% after dropping 0.8% in June.
"We don't think these strong July increases are fully representative of the underlying trends, because it looks like temporary factors helped boost the July readings," said Daniel Silver, an economist at JPMorgan in New York.
Nevertheless, the rise in industrial output bodes well for third-quarter gross domestic product.
Economists at Goldman Sachs raised their third-quarter GDP tracking estimate by 0.2 percentage point to a 2.4% annualized rate, citing the strong increases in motor vehicles and utilities production.
The economy grew at a 2.4% pace in the second quarter.
Reporting By Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/world/us/us-sin ... 023-08-16/
"US housing starts surge in boost to economy"
By Lucia Mutikani
August 16, 2023
Summary
* Single-family housing starts increase 6.7% in July
* Single-family building permits rise 0.6%
*Overall housing starts climb 3.9%; permits gain 0.1%
* Manufacturing production increases 0.5%
WASHINGTON, Aug 16 (Reuters) - U.S. single-family homebuilding surged in July and permits for future construction rose amid an acute shortage of previously owned houses, but mortgage rates climbing back to near two-decade highs could slow the housing market improvement.
The sharp rebound in groundbreaking on single-family housing units reported by the Commerce Department on Wednesday was another sign of the economy continuing to defy dire forecasts of a recession.
It followed news on Tuesday that retail sales rose strongly in July, which prompted economists to upgrade their growth estimates for the third quarters.
With inflation retreating, economists did not see the flow of upbeat data leading to another interest rate hike next month.
"Housing generally has shown resilience, but Fed officials may overlook this latest news of strengthening demand in the economy when it comes to judging whether to hike rates again this year because of the progress made on the inflation front," said Christopher Rupkey, chief economist at FWDBONDS in New York.
Single-family housing starts, which account for the bulk of homebuilding, jumped 6.7% to a seasonally adjusted annual rate of 983,000 units last month.
They rose 9.5% year-on-year in July.
The increase in groundbreaking was led by the West, where single-family starts soared 28.5%.
Starts rose 12.5% in the Midwest.
But they fell 3.4% in the Northeast and declined 1.3% in the densely populated South.
After being pummeled by the Federal Reserve's aggressive monetary policy tightening, the housing market has stabilized.
Further improvement, however, looks likely to be curtailed by the renewed increase in mortgage rates.
The average rate on the popular 30-year fixed mortgage has risen to 6.96% over the past weeks, according to latest data from mortgage finance agency Freddie Mac.
The rate is within striking distance of the 7.08% seen in late October and early November, which was the highest since April 2002.
Mortgage rates near 7% were attributed to the ebb in confidence among homebuilders in August, with the National Association of Home Builders saying more builders were offering incentives to attract buyers amid expectations of lower sales.
The Fed has since March 2022 raised its benchmark overnight interest rate by 525 basis points to the current 5.25% to 5.50% range.
Starts for housing projects with five units or more were unchanged at a rate of 460,000 units in July.
Demand for rental accommodation, largely driven by higher mortgage rates sidelining some potential home buyers, is slowing.
There is also a record stock of multi-family housing under construction.
Overall housing starts increased 3.9% to a rate of 1.452 million units in July.
Economists polled by Reuters had forecast starts rising to a rate of 1.448 million units.
"The need for new single-family homes, which is driven by scarce existing home inventory, should keep a floor under single-family construction," said Nancy Vanden Houten, U.S. lead economist at Oxford Economics in New York.
"Homebuilders increased their use of incentives again in August, which may support sales and prevent a steep fall in single-family starts."
Permits for future construction of single-family homes rose 0.6% in July to a rate of 930,000 units.
They have now increased for six straight months and were lifted by rises in the Midwest and South.
Single-family building permits, however, tumbled in the Northeast and were unchanged in the West.
Permits for housing projects with five units or more fell 0.2% to a rate of 464,000 units, the lowest level since October 2020.
Overall building permits edged up 0.1% to a rate of 1.442 million units last month.
Stocks on Wall Street were higher.
The dollar was steady against a basket of currencies.
U.S. Treasury prices rose.
TIGHT SUPPLY
Despite the rise in starts, housing supply is likely to remain tight.
The number of houses approved for construction that are yet to be started fell 0.4% to 277,000 units in July.
The single-family homebuilding backlog dropped 0.7% to 140,000 units, while the completions rate for this segment increased 1.3% a rate of 1.018 million units.
Overall housing completions dropped 11.8% to a rate of 1.321 million units.
The inventory of single-family housing under construction fell 0.7% to a rate of 678,000 units.
The stock of multi-family housing under construction increased 1.1% to 986,000 units, the highest level since the government started tracking the series in 1970.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.
There was encouraging news on the industrial side of the economy, which has been bruised by the U.S. central bank's rate hikes.
Output at factories rebounded 0.5% in July after declining 0.5% in June, the Fed said in a separate report.
The rebound was driven by a 5.2% acceleration in motor vehicle and parts production.
But this partly reflected difficulties adjusting the data for seasonal fluctuations.
Production typically falls in July when automakers idle plants for retooling.
However, the temporary plant closures do not always happen, which could throw off the model that the Fed uses to strip out seasonal fluctuations from the data.
Output at mines rose.
Utilities production soared 5.4% after three straight monthly declines as a heat-wave across many parts of the country increased demand for air conditioning.
As a result, industrial production shot up 1.0% after dropping 0.8% in June.
"We don't think these strong July increases are fully representative of the underlying trends, because it looks like temporary factors helped boost the July readings," said Daniel Silver, an economist at JPMorgan in New York.
Nevertheless, the rise in industrial output bodes well for third-quarter gross domestic product.
Economists at Goldman Sachs raised their third-quarter GDP tracking estimate by 0.2 percentage point to a 2.4% annualized rate, citing the strong increases in motor vehicles and utilities production.
The economy grew at a 2.4% pace in the second quarter.
Reporting By Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/world/us/us-sin ... 023-08-16/