Housing Starts Post Healthy Gain. Treasury Techs Point to Higher Rates Short Term

Housing Starts (September 2012)

 
– Starts were 872,000 (seasonally adjusted, annualized)
– Previous was 758,000
– Permits were 894,000.  Previous was 801,000.

One of the interesting things about this and recent improvements in Housing Starts is the increase in multifamily (5+ units.)  Multifamily was up 25%.  Housing Starts are in units.  A single family home is 1 unit.  A 24 unit apartment building is 24 units. 

I live in San Francisco.  Within 4 blocks of my home there are 6 mixed use buildings under construction and 2 lots prepared for contruction.  There are about 475 apartments total in these.  The largest of these was ready to start about 4 years ago when the liquidity crisis happened and the builder lost his construction financing.  It was the lack of construction financing which slowed Starts to a crawl.   

MBA Mortgage Applications (week ended 10/12/2012)
 
Purchase Index – Week/Week  +1.0%
Refinance Index – Week/Week -5.0%
Composite Index – Week/Week -4.2%

The Treasury techs are all bearish (lower prices, higher yields)  Expect higher Treasury yields and mortgage rates until at least the end of October.