Morning Commentary: Housing Starts – A Continued Bright Spot for the Economy
A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Housing Starts – A Continued Bright Spot for the Economy
Share this story:
Alan Rose Foreign Exchange Senior Trader
Approximately one year ago, a 30-year fixed rate mortgage was nearly 4.94%. Today, that 30-year rate sits near 3.60% and has rekindled optimism about the housing market to offset weakness in other areas of the economy. U.S. Housing Starts for October increased by 3.8% from September, and housing permits, which are a key metric for future construction, jumped to a 12-year high.
Housing starts have advanced by 8.5% on a year-over-year basis in October with much of those gains occurring over the past months as the Fed has lowered interest rates three times in that time. Parsing the data, single-family starts, which accounts for the largest share of the housing market, rose for the fifth straight month and the more volatile multi-family sector also rebounded strongly.
Unfortunately, for those who are trying to buy a home in the greater Los Angeles area, the lower interest rates have been offset by much higher home prices over the past years. The median price of homes in the U.S. currently listed with Zillow is $289,000, and the median price of homes that have sold is nearly $237,000.
The median price of a home in the Los Angeles area is nearly $700,000 ($605,000 in California); the more desirable areas can be multiples of that number making home ownership out of reach for many and forcing more people to rent or for younger people to remain at home. Overall, low interest rates have helped the housing sector and have aided in the refinancing of older higher interest rates to help keep the economy growing and moving forward despite strains from the trade war.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
There was a lack of first tier data overnight. Global equities remain generally better bid overnight while G7 interest rates remain suppressed. The U.S. dollar is attempting to consolidate after three straight days of losses. Fed Chairman Powell’s meeting at the White House yesterday raised concerns for the U.S. dollar as two of the topics that were discussed were the use of negative interest rates and the continued strength of the U.S. dollar. The White House continues to pressure the Fed to keep rates low to help offset the ill effects of the trade war.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Non-deposit investment products:
Are not FDIC insured,
Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and
Are subject to investment risks, including possible loss of the principal invested.
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. City National Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Tune in for a guide to ETFs and investing strategies for potential long-term success. View in a browser Fidelity Fidelity Log in Creating a portfolio with ETFs: Why and how Creating a portfolio with ETFs: Why and how
Exclusive webinar: The market, my portfolio, and options. Exclusive webinar: The market, my portfolio, and options. View in a browser Fidelity Fidelity Log in The market, my portfolio, and options The market, my portfolio, and options
Post a Comment