Daily Commentary by Larry Baer: The Commerce Department reported earlier this morning that housing starts and building permits jumped to an 18-month high in November. The majority of the gain for each of the two components of this report was related to a surge in multi-family demand. Housing starts for multi-family units posted a month-over-month gain of slightly more than 25% while multi-family building permit issuance was up 13.9%. By comparison, single-family construction improved by 2.3% and building permits posted a modest 1.6% gain. Mortgage investors shrugged the whole thing off.
The slight upward pressure building for mortgage interest rates this morning is a reflection of nervousness in front of this afternoon's Treasury Department auction featuring $35 billion of 5-year notes. Yesterday's 2-year note offering saw lukewarm demand and traders are concerned that weakness will carry over to today's sale. A weak 5-year note auction has the potential to create a "snow-ball" effect that will nudge mortgage note rates higher not only today - but probably for the balance of the week. The auction will conclude at 1:00 p.m. ET and I'll post the result on my website as soon as possible thereafter.
In terms of other events on this week's calendar mortgage investors will likely pause just a moment to take a look at Wednesday's Existing Home Sales figures, and Thursday's final guesstimate of third-quarter Gross Domestic Product. The very few traders still at their desk on Friday will probably barely notice the November Personal Income and Spending and New Home Sales figures before racing out of the door to get an early start on the three-day Christmas Holiday. The mortgage market will close early at 2:00 p.m. ET on Friday and will remain closed on Monday, December 26th.
In my judgment, the potential for notably lower mortgage rates into the end of the year is fading at an accelerating pace.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
