Stocks and Mortgage Bonds:
- Stocks started the day with mixed performance, while Mortgage Bonds traded near unchanged levels.
- The Atlanta Fed's Business Inflation Expectations for January dropped significantly from 2.24% to 2.2%, indicating a potential decline in inflation.
NAHB Housing Market Index:
- The January NAHB Housing Market Index, measuring builder confidence, surged by 7 points to 44, the highest level since September.
- Key components showed positive changes: Current Sales rose to 48, Future Expectations increased to 57 (indicating expansion), and Buyer Traffic improved to 29.
- This trend resembles the beginning of the previous year, suggesting a brighter outlook for the housing market in 2024.
Housing Starts & Permits:
- Housing Starts fell by 4% in December, reaching an annualized pace of 1.46 million units after a slight November revision.
- Single-Family Starts, crucial for the housing market, dropped by 9% but remained 16% higher year over year.
- Building Permits, indicating future supply, rose by 2% to a 1.5 million annualized pace, up 6% year over year.
- Single-Family Permits increased by 2% to 977,000, marking a 33% year-over-year rise.
- Completions showed a 9% increase overall, with Single-Family completions rising by 8%.
- Despite these figures, the supply of completed homes, expected to reach 1.57 million in the coming year, falls short of the demand, which stands at 1.9 million. This demand-supply gap could support home values, especially during the upcoming spring home buying season.
- Initial Jobless Claims dropped by 16,000 to 187,000, the lowest level since the 1960s. However, this figure may be influenced by the holiday season.
- Continuing Claims, representing ongoing unemployment benefits recipients, fell by 26,000 to 1.806 million. The duration of elevated figures raises questions about whether people are finding jobs or if benefits are expiring. Additionally, the data may be somewhat obscured due to the inclusion of the New Year's Holiday.
In summary, the update highlights mixed market performance, a decrease in inflation expectations, positive signs in the housing market, and historically low initial jobless claims, with holiday-related influences noted.
