{"id":192180,"date":"2023-06-20T12:20:00","date_gmt":"2023-06-20T16:20:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=192180"},"modified":"2023-06-20T12:30:57","modified_gmt":"2023-06-20T16:30:57","slug":"real-estate-bounces-back-as-powell-prepares-congressional-testimony-jun-20-2023","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/real-estate-bounces-back-as-powell-prepares-congressional-testimony-jun-20-2023\/","title":{"rendered":"Real Estate Bounces Back as Powell Prepares Congressional Testimony: Jun. 20, 2023"},"content":{"rendered":"\n

Equities are selling off this morning as today\u2019s construction data showed a fierce uptick in activity on the eve of Federal Reserve Chairman Jerome Powell\u2019s testimony before Congress. The data arrives just a day after homebuilder sentiment reflected seven consecutive months of growth, reinforcing a belief that the housing market has bottomed. Yet concerns are growing that a hawkish Powell tomorrow and Thursday could be the equivalent of ants at a picnic of real estate optimism.<\/p>\n\n\n\n

Housing starts spiked 21.7% in May, the fastest month-over-month (m\/m) gain since October 2016. May\u2019s 1.631 million seasonally adjusted annualized units (SAAU) blew past expectations calling for 1.4 million and exceeded April\u2019s 1.34 million. Plans for future construction also gained solidly, with building permits rising 5.2% m\/m to 1.491 million SAAU, much higher than projections for an unchanged level of 1.42 million.<\/p>\n\n\n\n

Multifamily apartment buildings boosted the number of starts the most, with a 28.1% m\/m increase while single-family rose 18.5%. In fact, apartment unit starts rose to their highest level since 1986. Most regions of the nation experienced gains, with the Midwest leading with a 66.9% increase during the period. The South and West regions also contributed strongly, up 20.3% and 16.4%, respectively, while the Northeast offset some of the progress, declining 18.7%. Apartment buildings also led the charge for permits, rising 7.8% during the period while single-family rose 4.8%.<\/p>\n\n\n\n

\"Apartment<\/figure>\n\n\n\n

Optimism is being expressed by more than shovels in the ground and trips to local building departments. After 10-months of home builder pessimism, the National Association of Home Builders NAHB\/Wells Fargo Index has jumped into positive territory, climbing from 50 in May to 55 in June. Yesterday\u2019s June reading is also the seventh-consecutive month of increases for the index, which hit a low of 31 last December. Home builder sentiment is being supported by mortgage rates stabilizing in the 6% to 7% range and a shortage of existing homes on the market resulting from the following factors:<\/p>\n\n\n\n