There is not a lot of first-tier information this week but what we are getting confirms that the housing market, along with the tech sector, continues to hit on all cylinders as the bounce in activity we saw in June was even bettered in July. Not many sectors of the economy can say that. Yesterday we received housing starts and permits for July and both easily beat expectations. Starts bounced 22.6% in July when a 5.0% increase was expected. That’s 1.496 million starts annualized compared to the 1.245 million forecast. The starts number is the largest since 1.617 million in pre-pandemic January. When most sectors of the economy are struggling to hold some momentum from June, the starts numbers easily beat the 1.220 million in June. Permits were equally impressive with a month-over-month increase of 18.8% versus 5.4% expected. Annualized, that’s 1.495 million permits versus 1.326 million expected and 1.258 million in a solid June showing. Like the starts numbers the permits figure was only bested by the 1.536 million in January. Finally, check out our latest podcast starring Jack Hubbard, Chief Experience Officer at St. Meyer and Hubbard, has provided sales coaching for over 70,000 bankers in his lifetime. In this age of Covid-19 he leads a panel of CenterState Bank business development officers in how to develop new business when traveling isn’t an option. The itunes link can be found here and the Spotify link here.
As mentioned above both housing starts and permits showed surprising strength by exceeding even the robust bounce in activity that we say in June. Residential starts jumped by 22.6%, the most since October 2016, to a 1.5 million annualized rate from June. Expectations were for 1.25 million slightly besting the upwardly revised 1.22 million in June. Applications to build, a proxy for future construction, increased 18.8%, the most since January 1990. The 1.5 million rate of permits topped the median estimate for 1.33 million and is now above the February pre-pandemic rate. Helping boost the overall totals, Multifamily starts, a category that tends to be volatile and includes apartment buildings and condominiums, surged 58.4% to a 556,000 pace. The monthly increase was the largest since January 2011. In any event, housing appears to be fine and well and looking to be a real key player in the economic rebound.
July Existing Homes Sales - The Big Daddy of Housing - is Expected to Be Strong
We talked about housing starts and permits on the first page and how the momentum from June is being bested in July. This Friday we’ll get July existing home sales, the Big Daddy of residential housing. This segment accounts for 90% of the residential market and another strong report is expected. Sales are expected up 14.4% to 5.40 million houses sold annualized basis, which would be the highest since just prior to the pandemic and one of the strongest monthly showings in years. Expectations are that it’ll be two straight months of rebounding sales as the June numbers were up 20.7% after a disappointing May. So while certain segments of the economy have cooled a bit in July, all segments of the housing sector are expected to not only maintain the momentum that began in June but build on it in July. Impressive.
Agency Indications — FNMA / FHLMC Callable Rates
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