Announced this morning, Housing Starts were much higher than expected at 1,575,000 in August and a 12.2% increase from the previous month, a solid rebound from the previous month’s revised -10.9% decrease. Meanwhile, Building Permits were much lower than expected at 1,517,000 in August and a decrease of -10.0% which is even more negative than the previous month.
Overall, mixed data on housing with a rebound in starts coupled with a sizable drop in building permits for August. Despite limited building in previous years, the housing market is under pressure from rising interest rates affecting affordability. Furthermore, the housing market remains vulnerable as the Federal Reserve meets this week and is expected to raise rates even further to combat inflation given a relatively resilient labor market. Considering these dynamics, the depth and duration of monetary tightening will be key drivers for the housing market and the strength of the economy in the coming months.
In all, the 10-year US Treasury yield ticks slightly higher and equity futures are lower as we head into the market open.
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