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Housing Data Better than Expected on Growth in Northeast

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Tuesday, September 21, 2021

Tuesday morning pre-market activity continues the bargain-buying we saw in the last hour of the regular trading day Monday. After a rabid sell-off climate yesterday morning, which saw the Dow plummet 972 points at the low, we’re now seeing the blue-chip index +190 points, with the S&P 500 +20 and the Nasdaq +65 points. We’re still down for the month, as might have been expected, but if this is the -5% sell-off some analysts were predicting, we’ll need to see another leg down.

We saw better-than-expected numbers in the housing market this morning for the month of August, with Housing Starts coming in at 1.62 million, higher than the 1.55 million estimate, which happened to be the headline number for July. However, within these numbers illustrates a bit of weakness, with less-profitable multi-unit buildings providing all the gains for the month, +21.6%, while the lucrative single-family segment -2.8%.

Building Permits, a proxy for future starts (though not always — in this supply-chain-constrained housing market environment, rising prices have left lots of permits non-started so far in 2021), also outperformed expectations: 1.73 million versus the 1.62 million estimate and 1.63 million reported for July. Both multi-segment and single-family rose for the month, with the multi-unit space growing at a faster clip.

More good news: new permits were up in all regions across the country, suggesting economic growth not just in hot sectors of the housing market. Perhaps surprisingly, the Northeast led the way at +18.5% in August, followed by the South at +6.7%, the West at +3.5% and the Midwest +0.9%. Overall, permits were up 6% month over month — a nice level of housing growth.

The Current Account for Q2 came in this morning at -$190 billion — the deepest level we’ve seen since Q2 2007 — but not as deep as the -$196 billion expected. Accounting for 3.3% of total U.S. GDP in the quarter, the print saw reduced service surpluses and higher demand for air travel and sea freight lead the way down. These account deficits have increased every quarter since Q4 2019.

Finally, Johnson & Johnson (JNJ - Free Report) brings more good news on the Covid vaccination front: a booster shot — really just a second dose, akin to the Pfizer/BioNTech and Moderna (MRNA - Free Report) two-dose vaccine — has increased efficacy to 94%. This is now in the ballpark of the Pfizer and Moderna vaccines, which are both higher than most preventative vaccines, such as the flu shot. Now if we can just convince more Americans to get vaccinated.

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