The market's random walk continued through the morning session as the major equity indices opened in the red only to make baby steps to the upside by the afternoon. Much of the reprieve is due to a small upside swing in the price of oil to above $47.50 per barrel, as well as natural gas getting a 2.1% lift. Central banks around the globe are stepping in to help boost economies in the face of currency weakness. In particular, the Bank of Japan cut next year's inflation forecast and expanded a loan program to help boost lending. Many economists expect that the European Central Bank (ECB) will announce a quantitative easing (QE) program to help give the euro a boost. It's a relatively quiet day in terms of domestic economic news, but there looks to be yet another glimmer of hope for the housing sector.
Complementing yesterday's positive report from the National Association of Home Builders (NAHB) was today's release of housing starts and permits for the month of December. Housing activity was shown to have picked up during the month and, this time, the strength was concentrated in the single-family component. Housing starts recovered by 4.4% in December after declining by 4.5% in November. Expectations were for a pace of 1.041 million starts in December, but the pace came in at a seasonally adjusted annual rate (SAAR) of 1.089 million which was up 5.3% over last year. Housing permits on the other hand, declined by 1.9% in December after a 3.7% decrease in November, for a SAAR of 1.032 million units. This made the pace up 1.0% on a year-over-year basis, while analysts forecasted a SAAR of 1.060 million unit permits. Most encouraging was the fact that permits for single-family homes increased by 4.5% in December, however multifamily permits declined by 11.8%. With all these mixed signals, we note that housing is still on a flat trajectory without a solid long-term trend. However, the fact that strength is coming back in the single-family component is very encouraging going forward.