New residential construction in the US rose to a five-month high in December, as homebuilders boosted production to take advantage of lower borrowing costs.

Federal Reserve Vice Chair for Supervision Michelle Bowman said in comments Wednesday that the central bank plans to publish its Basel III endgame capital proposal for public comment before the end of March.

Some market sectors face growing challenges related to a K-shaped economy as servicers play an increasingly important role in keeping customers.

Loans will continue to be originated and closed in the name of Firstrust Bank but the MortgageCountry will oversee lending end-to-end and provide its leadership.

Data breach extortion group ShinyHunters used social engineering to steal customer names, addresses and phone numbers from the blockchain lender.

Half-Hearted Correction Continues

Don’t call it a correction.  Yields may have rallied 30bps in just over a week and apparently bounced almost perfectly at 4% (10yr), but they haven’t exactly done much over the past 2 days. It’s just as fair to say things are “sideways and waiting for guidance,” but the cautious approach is to respect the almost-too-obvious technical patterns in play since July. Specifically, bonds have rallied 25-30bps and then consolidated toward slightly higher levels on multiple occasions. This could be the beginning of another similar pattern, but anything is possible if data is gloomy over the next 2 days (especially Friday). Today’s data was modestly unfriendly with core durable goods at 0.6 vs 0.4 and a lackluster 20yr bond auction (not typically a market mover, but added some pressure today).

Econ Data / Events

MBA Purchase Index (Feb)/13

157.1 vs — f’cast, 161.5 prev

MBA Refi Index (Feb)/13

1375.9 vs — f’cast, 1284.6 prev

Core Durable Goods (Dec)

0.6% vs 0.4% f’cast, 0.7% prev

Durable goods (Dec)

-1.4% vs -2% f’cast, 5.3% prev

Housing starts number mm (Dec)

1.404M vs 1.33M f’cast, — prev

Housing starts number mm (Nov)

1.322M vs — f’cast, 1.246M prev

Market Movement Recap

08:33 AM Roughly unchanged overnight and no major reaction to 830am data. MBS unchanged and 10yr up half a bp at 4.064

01:21 PM Slightly weaker after 20yr auction.  10yr yields up 2.2bps at 4.082. MBS unchanged after being up 3 ticks (.09).

02:09 PM zero reaction to Fed Minutes. MBS unchanged and 10yr up 2bps at 4.081

What goes down must come up? Definitely not always the case, but true this time for residential construction numbers. The Census Bureau’s latest report showed a rebound in December, with both housing starts and building permits moving higher after softer readings in prior months. Privately owned housing starts rose 6.2% to a seasonally adjusted annual rate of 1.404 million , up from November’s revised 1.322 million pace. Despite the monthly gain, starts were 7.3% lower than December 2024 levels. Single-family starts increased 4.1% to 981k, while multifamily starts (buildings with five units or more) came in at 402k. On the permitting side, activity also strengthened. Total building permits climbed 4.3% to an annual rate of 1.448 million , though that figure remains 2.2% below year-ago levels. Single-family permits slipped 1.7% to 881k, while multifamily authorizations rose to 515k, driving the overall monthly increase. For the full year, an estimated 1.36 million housing units were started in 2025, down 0.6% from 2024. Permits totaled approximately 1.43 million , representing a 3.6% annual decline. The year-end data suggest a construction sector that regained some footing in December but remained modestly below last year’s pace overall.

Mortgage application activity picked up last week with the Mortgage Bankers Association (MBA) reporting an increase of 2.8% on a seasonally adjusted basis for the week ending February 13. Refi applications were in the driver’s seat, and although it was hardly a “jump”, the Refinance Index did increase 7% from the previous week and was 132% higher than the same week one year ago. marking the strongest week for refinance activity since mid-January. This also keeps refi demand in the highest range seen since early 2022. Purchase demand moved in the opposite direction, falling 3% versus the previous week. Notably, VA purchase applications bucked the broader trend, rising 4% for the week. Joel Kan, MBA’s Vice President and Deputy Chief Economist, attributed the pickup in overall activity to the lowest mortgage rates in four weeks.  The composition of activity shifted modestly. The refinance share of total applications increased to 57.4% from 56.4% the prior week, while ARM share ticked up to 8.2% . FHA share held steady at 18.4%, VA share rose to 16.5% , and USDA share remained unchanged at 0.4%. Mortgage Rate Summary:
30yr Fixed: 6.17% (from 6.21%) | Points: 0.56 (unchanged)
15yr Fixed: 5.50% (from 5.65%) | Points: 0.73 (from 0.68)
Jumbo 30yr: 6.21% (from 6.30%) | Points: 0.27 (from 0.34)
FHA: 5.99% (from 6.01%) | Points: 0.65 (from 0.68)
5/1 ARM: 5.29% (from 5.33%) | Points: 0.62 (from 0.67)

Builder confidence fell for the second straight month in February according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Affordability pressures and elevated construction costs continued to hamper already gloomy sentiment. While the move was modest in outright terms (just one point lower than before), it reinforces the broader malaise seen over the past several years.  The underlying components were mixed but leaned negative. The index measuring current sales conditions held steady at 41 , while the gauge tracking prospective buyer traffic declined two points to 22 , remaining firmly in “low to very low” territory. Most notably, future sales expectations dropped three points to 46 , extending their move below the breakeven level of 50. “Builders reduced their expectations for future sales as buyers report affordability challenges, which is contributing to declining consumer confidence for the overall economy,” said NAHB Chairman Buddy Hughes. He added that while most builders continue to offer buyer incentives — including price reductions — many prospective buyers remain on the sidelines. At the same time, remodeling activity has remained comparatively resilient due to limited household mobility. NAHB Chief Economist Robert Dietz noted that affordability remains a central obstacle early in 2026, arguing that meaningful improvement will require policies aimed at bending the construction cost curve and expanding attainable housing supply. On a more constructive note, he pointed to easing inflation as a potential pathway to lower interest rates for both mortgages and builder financing.

Mortgage rates at the average lender moved up by 0.01% today–the smallest increment measured by the MND daily rate index. This means that most borrowers won’t see a meaningful different in today’s rates vs yesterday’s. That’s welcome news considering yesterday’s rates were tied for the second best day in more than 3 years. In the bigger picture, the absence of improvement over the past 2 days may suggest that recent bull run in rates is pausing for reflection, or at least until and unless certain economic reports justify renewed momentum. On that note, this week’s nearest examples of such reports will almost all be released on Friday morning, but they’re notably less potent than the data seen over the past 2 weeks.