Simonsen Daily Briefing

Agreement & Divergence

The demand picture is more coherent than it looks at first glance — and it's cautiously positive. MBA purchase applications are up 6.73% YoY with the 4-week average accelerating to +11.57% YoY, Altos new pending sales are running +10.46% YoY (though the single-week print dipped), and existing home sales beat expectations at 4.02M SAAR, turning YoY positive for the first time recently. These three independent demand signals are pointing the same direction: buyers are present in the market at current rates.⚑

The contradiction that deserves attention is the Xactus MII vs. MBA divergence. The MII — which leads MBA applications by 2-4 weeks — is running -3.85% YoY on its spot reading, while the MBA is +6.73% YoY. The MII's 4-week average is only +0.61% YoY and falling for three consecutive weeks. If MII is the leading signal here, the MBA's current strength may not persist into late May. This is the most actionable tension in the data right now.⚑

The starts vs. permits divergence is a genuine contradiction builders should worry about. March starts surged to 1,502K SAAR (+10.85% YoY), blowing past the 1,350K consensus. But permits collapsed to 1,363K, missing expectations and falling -7.97% YoY — with Single-Family Permits now negative for 22 consecutive months. Builders started aggressively what they had already permitted, but they're pulling back sharply on future authorization. New home median prices are down -6.18% YoY simultaneously. Builders are discounting to move existing inventory while quietly shutting the door on future supply.⚑

Housing Impact of Economic Data

Two labor market data points are pulling in opposite directions. The hires rate jumped to 3.5% in March — up 0.4pp from February and now above the 3.1% level flagged as historically suppressed. This is meaningful: a higher hiring rate directly supports first-time buyer formation, relocation-driven demand, and income confidence. More people getting new jobs means more people entering the housing funnel. However, long-term unemployed (27+ weeks) rose again to 1,833K, up 9.63% YoY, and median unemployment duration is 11 weeks — elevated. These are two different labor market stories coexisting: the employed are doing fine (hourly earnings +3.57% YoY), but workers who've fallen out are staying out longer, creating a slow-building shadow risk for mortgage delinquency 6-12 months out.⚑

CPI came in cooler than expected at +3.78% Headline, but core ran hotter at +2.74%. shelter CPI remains stuck at +3.29% YoY — still elevated but decelerating. The rate market responded with the 10-year Treasury at 4.48%, pushing the 30-year fixed to 6.52%. The spread at 2.09pp remains elevated but inched down. The mechanism that matters: if headline inflation continues cooling, the Fed gains room to cut, Treasury yields follow, and a spread compression from 2.09pp toward the historical 1.7pp would push mortgage rates toward the mid-5s even without dramatic Fed action. That's the bull case for affordability recovery.⚑

Consumer confidence at 92.8 beat expectations of 87.9 — three consecutive months of improvement. That's directly relevant to high-consideration purchases. Buyers who feel secure in their jobs and finances pull triggers on homes; 92.8 isn't euphoric but it's no longer recessionary.⚑

What to Watch

- MII vs. MBA resolution: The Xactus MII's 4-week average has fallen three consecutive weeks while MBA surges — one of them is wrong about where demand goes in late May. The next two weekly MBA prints will clarify whether current application strength is real or the MII is already telegraphing a pullback.⚑

- Permit trajectory in the South: South permits are -14.27% YoY at their lowest since June 2023, while South existing sales are the one bright regional spot (+2.75% YoY). Builders are retreating exactly where resale demand is holding up — watch whether this tightens resale inventory faster than seasonal norms in Sun Belt markets by midsummer.⚑

- Hires rate durability: March's 3.5% hires rate is a potential inflection point after months of suppression. One month doesn't make a trend. If April JOLTS (released early June) confirms another month at or above 3.5%, that's a genuine leading indicator of housing demand recovery worth a dedicated article.⚑

Article idea: "Builders Are Blinking: March Starts Surged But Permits Collapsed — What It Means for 2027 Supply" — the starts/permits divergence combined with new home price cuts of -6.18% YoY tells a coherent story about builders managing through a difficult moment while quietly setting up a future supply shortage.⚑