From our colleagues at our sister company, Argent Trust:
In this morning’s data, Housing Starts were much less than expected at 1,283,000 in August, which is a -11.3% decrease from the previous month. This figure has fallen well below the 1,427,000 level late in 2022. Building Permits were much higher than expected at 1,543,000 in August, which is an increase of 6.9% from the previous month. This figure is higher than the 1,342,000 level from late last year.
Overall, a drop in starts and a rise in permits in August. Reduced sentiment and weather conditions likely impacted the willingness of homebuilders to start new projects in the month. With starts falling well below the level seen in late 2022, it hints that policy tightening by the Federal Reserve is having some impact. However, building permits rose at the same time, suggesting projects on existing homes increased. Higher rates on mortgages are keeping many individuals in their current homes. While only 4% of GDP, the impacts of housing seep into other areas of the broader economy. Given rates may stay higher for longer to ensure inflation moves down closer to the Federal Reserve’s goal, how well housing data holds up will be a key dynamic for the economy in the months ahead.
In all, the 10-year US Treasury yield is higher and equity futures are slightly lower as we head into the market open.
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