Stocks are flattish this morning as earnings continue to come in. Bonds and MBS are flat. Despite all the sturm and drang in the median over the situation in Iran, the US stock market hit a record high yesterday.
Homebuilder sentiment declined in April amidst economic uncertainty according to the NAHB. The index fell to the lowest level since September 2025. Blame higher energy prices.
“Builder sentiment has fallen back in spring as buyers face ongoing elevated interest rates and growing economic uncertainty,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “The year started with hopes for housing momentum growth, but risks with respect to the Iran war, energy costs, and declines for consumer confidence have slowed the market.”
“With oil prices higher in the U.S., 62% of builders reported suppliers have increased building material costs due to higher fuel prices, including gas and diesel,” said NAHB Chief Economist Robert Dietz. “Energy costs make up approximately 4% of residential construction material input and service costs. With near-term economic risks elevated, 70% of builders reported challenges pricing homes given uncertainty about material costs.”
About 36% of builders cut prices, down slightly from the previous month. The average price cut is 5%. Note that import duties on Canadian lumber will fall this summer, so that should help improve things.
Overall economic activity increased at a “slight to modest” pace over the past six weeks according to the Fed’s Beige Book. The war in the Middle East is adding uncertainty to business conditions. This is affecting hiring decisions and investment in capital improvements.
“Manufacturing activity rose slightly to moderately in most Districts. Banking sector activity was generally steady with loan demand stable to up moderately. On balance, consumer spending increased slightly despite harsh winter weather in some regions and higher fuel prices. Many Districts continued to report signs of consumer financial strain, increased price sensitivity, and rising demand at food banks and other social service organizations, while spending among higher-income consumers was resilient. Housing market activity softened across several Districts as heightened uncertainty and rising mortgage rates dampened buyer demand. Commercial real estate markets improved, with strength in industrial properties, especially data center projects”
Cleveland Fed President Beth Hammack said that the Fed might be on hold for a while” “My baseline is that we’re going to remain on hold for a good while, but I do think that there’s two-sided risks to rates,” Hammack said during the “Squawk Box” discussion. “I think there’s risks that we might need to be more accommodative or more restrictive, depending on how the data comes out. But that’s why it’s a good time for us to stay patient and wait and see how the data flows through.”
