In this morning’s data, Housing Starts were higher than expected at 1,521,000 in February, which is a 10.7% increase from the previous month and a rebound from the revised -12.3% decrease in the previous report. Building Permits were also higher than expected at 1,518,000 in February an increase of 1.9% from the previous month.
Overall, both housing starts and building permits increased in February more than expected, reversing negative trends from the previous month. Stabilization in the housing market is positive as it is one of the more sensitive industries to interest rate movements. In addition, the supply of available homes remains low as many individuals are inclined to hold on to their existing homes to keep their low-rate mortgages.
As the Federal Reserve meets this week and contemplates when to start interest rate decreases, how the housing market will react is a key consideration. While only 4% of GDP, the impacts of housing seep into the broader economy. Should inflation remain sticky, keeping rates higher for longer, the housing market could be more challenged which will be a key dynamic for the economy and markets in the months ahead.
In all, the 10-year US Treasury yield is little changed following the report on housing and equity futures are lower as we head into the market open.
This material is intended to be for informational purposes only and is intended for current or prospective clients of Argent Trust Company. This information is obtained from sources believed to be reliable, and its accuracy and completeness are not guaranteed. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice, and does not take into account all the circumstances of each investor. Forward-looking assumptions are Argent Trust Company’s current estimates or expectations of future events or future results based on proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve. Actual results could differ materially from the results indicated by this information. Investments can go down as well as up. Past performance is not a reliable indicator of future results.