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First signs of rate-driven weakness in the housing sector

By Ilene
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First signs of rate-driven weakness in the housing sector

Courtesy of Sober Look

Today Citi and some other banks quoted the 30-year conforming mortgage rate at 4.625%. Others are quoting the rate even higher (see national averages below).
 

Source: Mortgage News Daily 

Once again, it's a low rate by historical standards, making many economists think that the housing sector is unlikely to be impacted. The markets say otherwise. Over the past three months, the Philadelphia Housing Index has underperformed the S&P500 by 9%.
 

Source: Ycharts

For the first time in a while, US homebuilders are becoming concerned. While sales expectations continue to be strong (given demographics-driven housing demand), the ISI Homebuilders Sales Survey turned down in recent weeks.
 

Source: The ISI Group

These higher rates may already be showing up in the employment numbers. In spite of the strong US employment report on June 5, on a seasonally adjusted basis, almost no new jobs have been created in residential construction in June (chart below). 
 

SoberLook.com

via Sober Look: First signs of rate-driven weakness in the housing sector.

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