U.S. Housing Starts Bounce in November

December 22, 2023

• U.S. housing starts surged +14.8% m/m to 1.56 million SAAR in November. Single-unit building permits also rose m/m, though a more modest +0.7%.
• This matters because we’re accumulating signs of a bottom forming in interest-rate-sensitive sectors (which have been weak this year).
• Bottom line: financial conditions are easing with market interest rates declining. This is setting up a boost as we progress into 2024, and U.S. housing data have leading indicator properties that we are monitoring closely.

Source: Don Rissmiller, Strategas

Mortgage Rates: Daily Rate Index

The bond market (which determines day-to-day rate movement) was paradoxically strong today. Bonds usually improve when economic data is weak and when Treasury demand is strong. Today's data was stronger than expected, and the scheduled auction of 20-year US Treasuries was lackluster. Despite those seemingly negative cues, bonds improved, and mortgage rates remained as low as they were yesterday.

For the average lender, this is right in line with the best levels since May, 2023. Tomorrow morning brings the week's heftiest slate of potentially significant economic data (the stuff that can the bonds that, in turn, can move the rates). That said, it also brings us one day closer to a very slow time of year for bond trading. That means we could continue to see more paradoxical movement with rates not necessarily following the advice of the econ data.