Article source: ConstructConnect

The Federal Reserve and the Bank of Canada have both held the line on interest rates lately. But neither has sworn off the possibility of raising them more at some time in the future.

The Fed’s federal funds rate is in a range between 5.25% and 5.50%. The BoC’s overnight rate is sitting at 5.00%.

Neither central bank is yet convinced that its nation’s inflation rate has been sufficiently suppressed.

In August, the Consumer Price Index for urban dwellers in the U.S. was +3.7% year over year; in Canada, the CPI was +4.0% y/y. In both instances, the y/y advances were a bit more rapid than in the previous month.

(more…)

Article source: ConstructConnect

The month-to-month descending path of U.S. housing starts due to progressive increases in interest/mortgage rates and shock-inducing new and resale home prices has not yet ended (see Graph 1). April 2023’s level of new residential groundbreakings was -28.8% compared with March 2022, moving from 1.803 million units to 1.283 million (both seasonally adjusted and annualized).

Until recently, the downturn was entirely concentrated in the single-family market. Over the last couple of months, however, multi-family starts have also been caught in the downdraft. Where once it appeared there might be convergence of the shares of total unit starts contributed by singles versus multiples, the gap has once again widened considerably, with singles now at more than 70% and multis at less than 30% (Graph 4).

The residential permits data does offer some hope that the slide in starts may be reaching an end. Permits point the way to shovels in the ground (i.e., the starts). The steep descent of permits in 2022, has transitioned to a saw-toothed climb in 2023 (Graph 5). And the sharp compression of the difference between permits and starts, both as 12-month moving totals, has reversed in the latest month (Graph 6).

(more…)