Posted on 11/20/2012 8:45:32 AM PST by whitedog57
We knew from yesterday’s home builder confidence index that housing starts were likely to increase in today’s report. Housing starts rose 3.6% in October versus an expectation of -3.7%, an over/under beat of 7.1%.
Building permits, on the other hand, fell -2.7% in October after a big increase of 11.6% in September.
Of course, it is a little early (and in late November) for the Sandy-related surge in housing construction to take place. We will likely increases in housing starts going forward through next year.
As Melissa Francis on Fox Business observed, American households seems unconcerned about the rapidly approaching fiscal cliff that is approaching and the largest tax increase since World War II. Add to this the survey that indicates that fewer U.S. firms are planning to hire over the next 6 months, and we may not see a continuation of the housing rally in 2013.
One of the reasons for surge in housing starts in the face of the fiscal cliff? The Fed’s massive downward manipulation of interest rates has resulted in near historic lows in mortgage rates.
As I said yesterday on Fox Business with Melissa Francis, housing is not out of the woods yet.
Helping The Fed is the ongoing fiscal fiasco in Europe (not to mention Japan). Moody’s downgraded France’s sovereign debt from the coveted AAA rating to AA. While this sounds horrid, bear in mind that Japan is currently rated at AA as well. The French 10 year sovereign yield rose to 2.145%, not exactly catastrophic.
Meanwhile, Moody’s also downgraded 3 major Italian insurers. Italy’s largest domestic insurer Generali Assicurazioni and its subsidiaries were lowered to Baa1, while Unipol Assicurazioni, and Allianz Spa had ratings cut by two notches each.
Like the US housing market, Europe isn’t out of the woods yet either.
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"Everybody has a home. You just need a house to put it in" George Carlin
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