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October 17, 2012

Housing Starts Post Healthy Gain. Treasury Techs Point to Higher Rates Short Term

October 17, 2012

Housing Starts Post Healthy Gain. Treasury Techs Point to Higher Rates Short Term

Housing Starts (September 2012)

 
– Starts were 872,000 (seasonally adjusted, annualized)
– Previous was 758,000
– Permits were 894,000.  Previous was 801,000.

One of the interesting things about this and recent improvements in Housing Starts is the increase in multifamily (5+ units.)  Multifamily was up 25%.  Housing Starts are in units.  A single family home is 1 unit.  A 24 unit apartment building is 24 units. 

I live in San Francisco.  Within 4 blocks of my home there are 6 mixed use buildings under construction and 2 lots prepared for contruction.  There are about 475 apartments total in these.  The largest of these was ready to start about 4 years ago when the liquidity crisis happened and the builder lost his construction financing.  It was the lack of construction financing which slowed Starts to a crawl.   

MBA Mortgage Applications (week ended 10/12/2012)
 
Purchase Index – Week/Week  +1.0%
Refinance Index – Week/Week -5.0%
Composite Index – Week/Week -4.2%

The Treasury techs are all bearish (lower prices, higher yields)  Expect higher Treasury yields and mortgage rates until at least the end of October.