Sunday, January 19, 2020
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Updated on January 17, 2020 10:21:52 AM EST

December’s Housing Starts kicked off today’s batch of economic releases at 8:30 AM ET, revealing a surprising 16.9% spike in new home groundbreakings. This was much stronger than expected and pushed starts to their best level in 13 years. The report includes multi and single-family starts though. A large contributor to the overall increase was a 29.8% jump in starts of multi-family homes such as condos and apartment buildings. Still, the 11.2% rise in single-family groundbreakings is a healthy rate that indicates housing sector strength. Fortunately, the number of new permits issued that helps predict future starts came in much weaker than expected. Unfortunately, the headline number on this report is enough to have a negative impact on this morning’s bond trading and mortgage pricing even though it is not considered to be highly important.

Today’s good news came in Decembers Industrial Production report at 9:15 AM ET. It showed a 0.3% decline in output at U.S. factories, mines and utilities, meaning the decline is a sign of manufacturing sector weakness. Forecasts were calling for a 0.1% increase in production. Since this is a sign of economic weakness, we can consider this report good news for bonds and mortgage rates.

The final report of the week was the preliminary reading to the University of Michigans Index of Consumer Sentiment for January. They announced a reading of 99.1 late this morning, down slightly from December’s final reading of 99.3. However, analysts were expecting to see a larger decline in the index. But this was not enough of a variance to cause much concern in the markets and has had little impact on this morning’s mortgage pricing.

Next week has very little scheduled that is expected to affect mortgage rates. The stock and bond markets will be closed Monday for the Martin Luther King Jr Holiday and will reopen Tuesday for normal trading hours. There is no early close today ahead of the holiday, but don’t be surprised to see things get quiet as the end of the day nears because some traders are likely to head home for the long weekend. Look for details on what is scheduled next week in Sunday evening’s weekly preview.

 ©Mortgage Commentary 2020