- XE Contributor
With the exception of existing home sales, the least important metric, the housing market continues to show surprising strength in the face of rising interest rates.
Last week housing permits and starts were reported. Permits fell, while the more volatile starts rose:
Neither set a post-recession record, although the three month moving average of starts, which takes away most of the volatility, did make another post-recession high.
Yesterday morning new single family home sales were reported. These are, if anything, even slightly more leading than permits, but are much more volatile and heavily revised. These were up:
But again, they did not set a new post-recession record.
The two least volatile, but reliable, measures of the housing market are single family permits and residential construction. Single family permits have historically peaked on average at the same time as overall permits - but they are much less volatile:
These did make a new post-recession high.
Residential construction has not been reported for February yet, but as of January, on an inflation adjusted basis, if had the second highest reading of any since the end of the recession, and has recently re-established a rising trend:
Finally, seasonally adjusted purchase mortgage applications continue to rise YoY, and on an absolute basis are just below last June's high (h/t Bill McBride a/k/a Calculated Risk):
The bottom line is that the housing market is a solid positive for now. There has not been any downturn due to increased mortgage rates, at least not yet. This bodes well for the economy over the next 12 - 18 months.
Next week we will get more price data, and I will report on housing prices and inventory - a crucial part of the story at this point - then.