Privately‐owned housing starts in November were at a seasonally adjusted annual rate of 1.56 million, above consensus expectations of 1.36 million.  This is 14.8 percent above the revised October estimate of 1.359 million, and is 9.3 percent above the November 2022 rate of 1.427 million.  

Single‐family housing starts in November were at a rate of 1.143; this is 18% above the revised October figure of 969,000. Lower rates contributed to more single-family homebuilding in November.

Further, homebuilder sentiment ended the year on a more positive note increasing for the first time in 5 months. Falling mortgage rates led to a pickup in prospective buyer traffic and sales expectations. Single‐family homebuilding in November:

🟢Permits +0.7% MoM: leading indicator of future starts. Highest level of SF permits since May 2022.

🟢Starts +18% MoM: Modestly more groundbreaking on new homes. Single-family housing starts are at the highest level since April 2022.

🔴Completions -3.2% MoM: Less supply added to the housing stock.

Single-family starts are outpacing SF completions for the first time since spring of last year.

U.S. housing starts are expected to fall to an annual rate of 1.35 million in January from 1.382 million one month earlier. Excluding the early pandemic months (spring 2020) that would be the slowest pace since November 2019. We'll find out shortly... (1/n) U.S. housing starts come in below consensus expectations at an annual pace of 1.309 million. This is 4.5% below the revised December estimate of 1.371 million and 21.4% below the January 2022 rate
of 1.666 million. Single‐family starts declined 4.3% compared to December. (2/n)

This month's CRE X-Factor analyzes the commercial real estate market slowdown. A few highlights:

1.) Commercial transaction volume fell in Q4 by 26% on a quarterly basis, making it the second consecutive quarter of declining deal activity. 2.) Cap rates for all asset classes are now trending up following a long downward trend. When prices become more broadly agreed upon, cap rates could move quickly as transactions pick back up, increasing the reference points available to buyers & sellers when valuing a property.

U.S. nonfarm payrolls are expected to increase by 200,000 in December and the unemployment rate is forecast to hold steady at 3.7%. We'll find out shortly...(1/n) Total nonfarm payroll employment increased by 223,000 in November and the unemployment rate fell to 3.5 percent. Modest downward revisions to both October an November. (2/n)

The number of openings was little changed at 10.5 million in Nov, beating expectations of a decrease to 10.1 m from 10.3 m one month earlier. The number of hires changed little at 6.1 million. Job openings outpaced hires by 4.4 million. This is still a hot labor market. (1/5) The ratio of open jobs to each unemployed person remained steady at 1.7. That is better than the nearly 2-to-1 levels seen in July, but still far above the 1.2 jobs per unemployed person that characterized the pre-pandemic years. (2/5)

U.S. pending-home sales for August were expected to fall 1.4% from the prior month. But they came in 2% lower from July and 24% lower than one year ago. Pending home sales are forward-looking indicator of home sales based on contract signings. August's pending home sales point to further declines in existing-home sales. This is supported by mortgage applications data, which have come in weaker in the month of September. With rates now touching 7 percent, further cooling in the housing market is all but assured.

U.S. new-home sales are expected to fall to an annual pace of 500,000 in August from 511,000 one month earlier... we'll find out in 5 minutes. (1/ Sales of new single‐family houses in Aug 2022 were at a seasonally adjusted annual rate of 685,000. Way above consensus expectation. This is 28.8% above the revised July rate of 532,000, but is 0.1% below
the August 2021 estimate of 686,000. Months' supply down to 8.1 months. (2/

U.S. pending-home sales down -4.1% MoM, were expected to increase +1%. Pending home sales are forward-looking indicator of home sales based on contract signings. This is the fourth straight month of declines. What's holding back sales? Lack of inventory and growing affordability challenges. Inventory turnover, the supply of homes for sale nationwide as a percentage of occupied residential inventory was at a historic low in February. You can't buy what's not for sale, even if you can afford it.

Sales of new single‐family houses in Nov 2021 were at a seasonally adjusted annual rate of 744,000, this is 12.4% above the revised (down) Oct. rate of 662,000. The median sales price of new houses sold in Nov. was $416,900, 18.8% higher than one year ago and a new record high. By stage of construction, the share of completed homes sold was 22%, down from 25% one year ago. Prior to the pandemic, completed homes made up the largest share of new homes sold. Today, it is homes under construction.

Existing-home sales rose 1.9% M/M in November. From one year ago, the inventory of unsold homes decreased 13.3% to 1.11 million (2.1-month supply at current sales pace). Properties remained on the market for 18 days & 83% of homes sold were on the market for less than a month. A higher velocity of sales (lower days on markets) helps to explain a housing market characterized by both higher sales & lower inventory levels. Purchase apps have been pointing to a strong end to the year for home sales as low rates & demographics continue to boost demand.

Nov housing starts report is an indication of strength for the housing market. The # of permits issued, which can signal how much construction is in the pipeline, increased by 3.6%, homebuilding rose as total housing starts increased 11.8% M/M (SF up 11.3%). This month saw an increase of 4% in the number of completed homes, which is additional new net supply added to the housing stock. The growth in completions means more homes on the market in the short-term, offering some immediate relief in alleviating housing supply shortages.

U.S. households own nearly $34 trillion in owner-occupied real estate, $11 trillion in debt, and the remaining nearly $23 trillion in equity. The national "LTV" is at its lowest level in more than three decades. (1/6) Mortgage debt as % of disposable income is at a near historic low. Many homeowners have locked into sub-4% rates. In fact as of Q1, the average interest rate on outstanding mortgage debt was appx. 3.5%. (2/6)

Agreed. Yield curve inversion and recession- let’s not confuse correlation with causation. It’s more of a spurious correlation, i.e. the real causal relationship is an unseen factor. So, what’s not spuriously correlated but actually related to the yield curve? (1/4)

https://twitter.com/calculatedrisk/status/1161715925868929024

1.) Our domestic economy is more interconnected than ever. When uncertainty increases somewhere else, we are the recipient of demand for safe harbor for assets (2/4)