The US Census Bureau released its New Residential Construction report for December today.  The report measures building permits, the start of the construction process (housing starts), and housing completions. While construction has definitely been running well below the highs seen 3 years ago, it continues to operate just above pre-pandemic levels.  That’s something that can’t be said for many other housing and mortgage market metrics. Last month’s data showed housing starts closer to the low end of 2024’s range.  Today’s report shows a bounce back to the highest levels since February. The multifamily sector played the biggest role in the rebound–especially in the South which accounted for 128k additional units.  Nationally, multifamily housing starts increased by 155k units to a 12 month high of 418k and single family starts rose 34k to a total of 1.05 million.

While it would be technically accurate to point out a slight increase in January’s homebuilder confidence (officially the National Association of Homebuilders Housing Market Index or HMI ), the type of movement we’ve seen in the past 2 years is better characterized as “incidental” in the bigger picture. As with most housing-related metrics, HMI plummeted in 2022 as interest rates skyrocketed.  It’s been broadly sideways ever since with the swings between highs and lows getting smaller and smaller. In market jargon, this is a textbook example of “consolidation”–something that can signal an eventual reversal back toward higher levels or a renewed slide to lower lows.  Absent another catastrophic episode like the Great Financial Crisis, it’s not clear what would make builders feel incrementally more gloomy than the post-pandemic lows.  As such, this consolidation is widely viewed as representing some sort of lower boundary.  Time is the key variable, and one that’s likely to be determined by economic factors such as interest rates and inflation. Other highlights from this month’s NAHB data:
30% of builders lowered prices in January, which is in line with the average of the past 6 months
Average price reduction: 5%, unchanged from last month
Sales incentives were used in 61% of transactions, also in line with norms

Mortgage rates are driven by the bond market and Friday was the least active day of the week for bonds.  There were no major economic reports to cause rapid changes in trading levels. As such, mortgage rates started out very close to the levels seen yesterday and most lenders didn’t make any mid-day changes. The absence of any significant movement is a victory, of sorts, in light of the ground covered over the past 2 days (the best 2-day improvement since November). On the other hand, rates began the week at the highest levels since May 2024. It’s more common to see bigger gains when rates are recovering from long term highs–a fact that detracts from the victory to some extent. Bonds are closed on Monday for the holiday and Tuesday could see a flurry of market activity in response to political news. There’s no way to know if that activity would be good or bad for rates ahead of time, let alone if it will even materialize in the first place. [thirtyyearmortgagerates]

The president-elect’s Cabinet nominee, Scott Turner, committed his support for affordable housing but also said he would examine the effectiveness of all HUD programs.

The non-QM segment industry-wide had a 25% increase in issuance dollar volume during 2024 as market conditions for private-label securitization were better.

Scott Bessent, Donald Trump’s pick to serve as Treasury Secretary, handled a policy-heavy confirmation hearing with poise, highlighting his preference for relaxed bank regulation, support of the 2017 Trump tax cuts and a hawkish approach to spending.

The agreement with the Securities and Exchange Commission resolves allegations of employee supervision shortcomings in the bank’s capital markets division.

Over 300 ex-Flagstar employees, initially acquired by Mr. Cooper, will transition to A&D Mortgage.

While it was never going to be on the same level as yesterday’s CPI in terms of market movement potential, Retail Sales was likely to be today’s most relevant data. The early price action confirmed that.  Jobless Claims and Philly Fed were stronger than expected. Retail Sales was the only report that was weaker, and that’s the way bonds chose to trade it, moving to erase some of the overnight losses.  Next up were comments from Fed’s Waller on the prospect for 2025 rate cuts and further inflation progress.  This kicked the rally into higher gear, bringing bonds well into positive territory on the day. Treasuries are also feeling enthusiastic about Bessent’s confirmation hearing (and his forceful thoughts on fiscal austerity). Either that, or we’re seeing some follow-through trading and

Do you know the interest rate on your loan? How about the age of your roof? Here in Austin, a big concern is too much growth: Austin has gained 1 million people in the last 15 years. Sprawl, traffic, and new construction have become the name of the game. As well as mounting property tax and insurance costs. Insurance agents and companies seem to be controlling homeowners, remodeling, landscaping, and…roofing. Property and climate risk platform ZestyAI conducted a 27,000-property advanced AI and aerial imagery survey on roof age, which found a surprisingly high proportion of properties have misreported the age of the roof as a result of out-of-date, or self-reported data. 17% of roofs are older than reported by an average of 8 years, and 63% of homeowners do not know the age of the roof, which creates significant risk for insurers and homeowners. “Many insurers still rely on self-reported roof ages, leading to inaccuracies that delay quotes, compromise customer experience, and inflate losses.” (Today’s podcast can be found here and this week’s is sponsored by Calque. White-labeled buy-before-you-sell solutions powered by Calque help you increase purchase volume and increase realtor business by helping them differentiate with a better process. With coverage in the 48 contiguous states, what are you waiting for? Hear an interview with Polly’s Adam Carmel on disruption in the mortgage industry and how companies should evaluate PPE providers.) Lender and Broker Services, Software, and Products