Building Up Housing Inventory | 01/21/2021
Stocks are slightly higher and Mortgage Bonds are a bit lower to start the day, giving back some of their gains from yesterday.
Initial Jobless Claims, which measures individuals filing for unemployment benefits for the first time, decreased by 26k to 900,000, but still remains at extremely elevated levels.
Continuing Claims, or those that continue to receive benefits, decreased by 127,000 to 5.1M. The Pandemic Unemployment Assistance Claims, which gives individuals benefits who would not usually qualify, dropped by 1.7M after falling 941k in the previous week. That figure now stands at 5.7M. Pandemic Emergency Claims, which extends claims by 13 weeks after regular benefits expire, decreased by 1.4M to 3M.
This is likely due to those benefits expiring, but it’s unclear if these individuals will be able to reapply as some of these have been extended in the latest stimulus package…so the decline may be temporary.
Housing starts up 5.8%, much stronger than expectations of a 0.8% gain. On a year over year basis, starts are up 5.2%. The most important figure to track for our business is Single family starts, which were up 12% and 28% year over year. This will help with so many homes that have been contracted but not built yet, as well as the tight inventory problem.
Permits were up 4.5% in December and 17% year over year. Single family permits were up 8% last month and 30% year over year.
Yesterday the NAHB Housing Market Index fell 3 points in January to 83 after setting a record high in November. While the media will likely focus on the fact that it fell by three points, it is still at extremely high levels. There are only three other readings higher over the past year, being 85 in October, 90 in November, and 86 in December. Remember, a reading above 50 signals expansion and we are still well above that level. The reason for the drop – Builders are concerned about a changing regulatory environment.
Current Sales decreased 2 points to 90, Sales Expectations fell by 2 points to 83, and Buyer Traffic declined 5 points to 68.
Mortgage Bonds were able to break above resistance at the 103.05 Fibonacci Level yesterday, which is now acting as a floor. If this level can hold and Bonds can regain their footing, there is room to move higher until reaching the 100-day Moving Average. The move higher will be difficult, as there is a triple ceiling.
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