Housing Starts in July showed an increase of 22.6%, which was above the market’s expectations. On a year-over-year basis, the increase is now pacing at 23.4%. Although the gain was mainly in Multi-family Starts, Single Family Starts were up by an impressive 8.2% year over year. This points to strong demand for housing, which has certainly benefited from the multi-trillions of dollars the Federal Reserve has spent to help stimulate the US economy. As long as the Fed keeps their foot on the gas, housing seems poised to continue to climb. If inflation does in fact creep higher, we will see mortgage rates rise in response. This will take away some of the housing affordability that has driven home values higher. It is certainly a push-pull situation, where some forces are good for housing long term and others are a drag.
The stock market continues to rise this morning pushing Apple value over $2T, the most valuable US company ever.
Mortgage bonds broke out above their 25 day moving average that we talked about yesterday. This is great news because they now have momentum to keep rising to test all-time highs. With this morning’s gains and the fact the Fed’s meeting minutes (which tend to have an adverse effect on bonds) are released today, the safe play is to lock. However, if you are able to closely follow the market, you could wait to see if bonds continue their climb.