US single-family homebuilding rebounded in September, boosted by demand for new construction amid an acute housing shortage, but the highest mortgage rates in nearly 23 years could slow momentum and delay the overall housing market recovery.
That was flagged by other data on Wednesday showing applications for loans to purchase a home plunged last week to levels last seen in 1995. In addition, the jump in housing starts partially recouped the decline in August.
The rebound in homebuilding probably reflected permits approved several months ago before mortgage rates broke above 7%. A survey this week showed confidence among single-family homebuilders slumped to a nine-month low in October, with builders reporting lower levels of traffic.
“In the very short-term, single-family construction activity is likely to increase with permits rising in every month of 2023 thus far, but at some point mortgage rates are likely to put a lid on new construction activity for home purchase,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Single-family housing starts, which account for the bulk of homebuilding, increased 3.2% to a seasonally adjusted annual rate of 963,000 units last month, the Commerce Department said. Data for August was revised to show starts dropping to a rate of 933,000 units instead of 941,000 units as previously reported.
Single-family starts rose in the Midwest, West and the densely populated South, but plunged 19.0% in the Northeast.
The housing market had shown signs of stabilizing before mortgage rates resumed their upward trend late in the summer, with the rate on the popular 30-year fixed mortgage vaulting above 7% in August. According to the Mortgage Bankers Association, the average contract interest rate on a 30-year fixed-rate mortgage rose 3 basis points to 7.70% last week, the highest since November 2000.
Mortgage rates have risen in tandem with the yield on the benchmark 10-year Treasury note, which has spiked to more than a 16-year high, mostly because of expectations that the Federal Reserve will keep interest rates higher for longer in response to the economy’s resilience. Since March 2022, the central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.
Residential investment has contracted for nine straight quarters, the longest such stretch since the housing market bubble burst, triggering the 2008 global financial crisis and the Great Recession. That downturn probably extended into the third quarter, though overall gross domestic product growth last quarter was likely the fastest since late 2021, thanks to a tight labor market that is underpinning consumer spending.
Stocks on Wall Street were trading lower amid mounting tensions in the Middle East. The dollar rose against a basket of currencies. U.S Treasury prices fell, with the yield on the 10-year bond rising to the highest level since July 2007.
Financial markets expect the Fed will leave rates unchanged at its Oct. 31-Nov. 1 policy meeting, according to CME Group’s FedWatch Tool, given the surge in Treasury yields.
Starts for housing projects with five units or more soared 17.1% to a rate of 383,000 units in September. Overall housing starts accelerated 7.0% to a rate of 1.358 million units in September. Economists polled by Reuters had forecast starts rebounding to a rate of 1.380 million units.
Permits for future construction of single-family homes rose 1.8% to a rate of 965,000 units, the highest since May 2022. Though permits are a leading indicator, economists cautioned against being too optimistic about homebuilding prospects, citing the soaring mortgage rates and souring builder sentiment.
“It’s not lights out for homebuilding, but we don’t know how many more body blows with the Fed’s interest-rate hammer the nation’s housing sector can withstand,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
“It’s a cliché,” says Bruce Springsteen, “but he is a rock star – and you can’t fake that.”
The Boss is talking about Jeremy Allen White, star of The Bear, who is now playing him in the upcoming film Deliver Me From Nowhere.
It comes after a flurry of biopics on musical greats in recent years, from Bohemian Rhapsody and Elvis to A Complete Unknown and Back To Black, but rather than an all-encompassing look at his epic career, this one focuses on a very specific period of its subject’s life; a raw portrayal of the young Springsteen, on the cusp of even greater success following the release of The River album, but struggling with inner demons and childhood trauma while writing the stark follow-up Nebraska, released in 1982.
Image: Bruce Springsteen on stage in LA in 1985. Pic: AP/ Lennox McLendon
Speaking at a Q&A held at Spotify’s London headquarters ahead of the film’s release, Springsteen, 76, said he had watched The Bear and “knew that was the kind of actor” needed – someone who could convey his inner turmoil, as well as play a convincing rock star.
“You either got that or you don’t have it, and he just had the swagger.”
Directed and co-written by Scott Cooper, the film is based on the book of the same name by Warren Zanes, and is the first time Springsteen’s life has been depicted on the big screen.
The star was on board straight away. “I figured, I’m 76 years old, I don’t really care what the f*** I do anymore. As you get older, certainly at my age, you take more risks in your work and in life in general.”
Image: Jeremy Allen White stars as Bruce Springsteen in Deliver Me From Nowhere. Pic: Disney/ 20th Century Studios
He and White first met at one of his gigs at Wembley Stadium, where Springsteen prepared himself for lots of questions. “I figured this guy is going to be tremendously interested in me.” But White had done his homework, arriving “so prepared that he really asked me very few questions”.
Springsteen was on set regularly, “which I always apologise to [White] for because… it’s gotta be really weird playing the guy with the guy’s stupid ass sitting there.”
Learning five Bruce songs
And White also had to take on the music. When told he would need to sing and play guitar, his jokey response was: “I don’t do those things. Are you sure?” He had about six months and learned on a 1955 Gibson J-200, sent to him by Springsteen, as the closest model to his Nebraska guitar.
“I was getting together with [teacher JD Simo] on Zoom, four or five, six times a week to prepare. And the first time we hopped on, I said, ‘hey, I’m so excited to learn how to play guitar with you’. And he said, ‘we don’t have time to learn how to play the guitar, we have time to learn these five Bruce songs’. So I learned the guitar in a very strange way.”
Springsteen says it “took me a moment” to get used to seeing his story being dramatised, to White playing him. But he was happy.
“I always go, damn, when did I get that good looking?” he jokes. But he says White’s performance was impressive, that he was able to sing songs “that are hard for me to sing, some of them”.
Keeping the sweat going
Mastering the big hits, Born To Run, Born In The USA, was tough, says White. Thinking he would need to keep his heart rate high for his performance scenes, White says he took a weighted rope on set, to skip and “keep my sweat going”. Turns out, it wasn’t necessary. “When you perform Born To Run or Born In The USA, that sweat comes naturally… I did not need to use that rope.”
Part of the film goes back to Springsteen’s childhood, to the house he grew up in. “They did a very, very good job of putting that house back together,” he says. It is the home he visits “in my dreams to this day, at least a couple of times year… so being able to physically walk into what felt like that living space, my grandmother’s house, my grandfather’s house with my parents, we all lived there together. It was quite a miracle and quite wonderful”.
Image: Springsteen with White and Stephen Graham at the Deliver Me From Nowhere London Film Festival premiere. Pic: Scott A Garfitt/Invision/AP
British actor and recent Emmy winner Stephen Graham plays Springsteen’s late father, and the drama delves into their difficult relationship.
Remembering the family struggles
Reliving those experiences was “powerful”, the star says. He watched an early screening with his younger sister, who held his hand throughout. “And at the end she says, isn’t it wonderful that we have this… it honours our family, it honours the memory of the struggles that we went through… To have it on film in the way that it was portrayed, meant a great deal to my sister and myself.”
Springsteen says he hopes people will connect with the film, with this part of his story, the same as the crowds in front of him do every time he walks on stage.
“The E Street Band will be good every night because that’s what we do,” he says. “But how great we’re going to be is up to you… Hopefully there’s an element of transcendence… and hopefully it stays with [the audience] for as long as they need.”
Brexit will have a negative impact on the UK’s economic growth “for the foreseeable future”, the UK’s most senior banker has warned.
Bank of England governor Andrew Bailey said a decline in the UK’s potential growth rate from 2.5% to 1.5% over the past 15 years was linked to lower productivity growth, an ageing population, trade restrictions – and post-Brexit economic policies.
But he did add that the economy is, however, likely to adjust and find balance again in the longer term.
“Over the longer term, there will be – because trade adjusts – some at least partial rebalancing,” he added.
Speaking at an international banking seminar on Saturday in Washington DC, Mr Bailey said: “For nearly a decade, I have been very careful to say that I take no position per se on Brexit, which was a decision by the people of the UK, and it is our job as public officials to implement it.
“But, I quite often get asked a second question: what’s the impact on economic growth?
“And as a public official, I have to answer that question.
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“And the answer is that for the foreseeable future it is negative.”
Image: Former prime minister Boris Johnson was a champion of Brexit. Pic: Reuters
However, Mr Bailey did say investment in innovation and new technologies, including AI, may help address the decline in productivity growth in the long run.
“If we take account of the impact of ageing and trade restrictions, we’re really putting our chips on investment,” he added.
“We’re putting our chips on general-purpose technology, and AI looks like the next general-purpose technology, so we need to work with it.
“We need to ensure that it develops appropriately and well.”
Mr Bailey warned that, although AI is likely to usher in a breakthrough in productivity long-term, it may “in the current circumstances, be a risk to financial stability through stretched valuations in the markets”.
“It doesn’t undermine the fact that AI, in my view, is likely, in addressing this slower growth issue, that we have and the consequences of it – that it is actually the best hope we have, and we really do need to do all we can to foster it,” he said.
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Has Rachel Reeves changed her tone on budget?
The Bank of England governor’s prediction comes as Chancellor Rachel Reeves is under pressure ahead of next month’s budget, with official figures showing muted growth in August following a surprise contraction in July.
Inflation surge
The Office for National Statistics (ONS) said gross domestic product (GDP) rose by 0.1% month-on-month in August and fell by 0.1% in July, in a revision to the previous estimate for no growth.
In the three months to August, GDP grew by 0.3% compared with 0.2% growth in the three months to July, the ONS said.
Ministers have unveiled their flagship plan to train and recruit workers for the booming clean energy sector, which it is hoping to supercharge in the next five years.
Up to £18m of new money has been pledged by the UK and Scottish governments specifically to move those working in the oil and gas sector into new roles.
Their jobs are about to fall off a cliff as the industry declines, with at least 40,000 of the current 115,000 jobs forecast to disappear by the early 2030s.
Almost all of those roles are thought to be fairly easily transferable into green industries – requiring little more than a few months of extra training.
But in the absence of government help, workers have been moving abroad, industry says, taking with them the expertise Britain badly needs to for its new greener energy system.
And it has left them feeling forgotten about after years of working to keep the lights on, and increasingly swayed by Reform UK, both GMB and Unite unions have warned Labour.
Pledge to double green jobs by 2030
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Energy Secretary Ed Miliband told Sky News that creating jobs in sectors like carbon capture and storage and hydrogen would help “create a future for those in the North Sea communities”.
The new £18m will pay for careers advice, training, and “skills passports” to enable oil and gas workers to make the switch without having to repeat qualifications.
The cash was announced on Sunday in the new Clean Energy Jobs Plan, which details how the government hopes to make good on its promise to double green jobs by 2030.
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1:39
Renewables overtake coal for first time
Mr Miliband said in an interview: “This plan shows 400,000 extra jobs in the clean energy economy by 2030.
“This isn’t a target. This is actually what we believe is necessary to meet all the plans we have across the economy.”
The first strategy of its kind hopes to plug the UK’s massive skills gap that threatens to derail the government’s target to green the electricity system by 2030.
It identifies 31 priority occupations that are particularly in demand, such as plumbers, electricians and welders, and lists a target to convert five colleges into new “Technical Excellence Colleges” to train workers.
‘You can’t train people for jobs that aren’t there’
Unions welcomed the plan, but pointed out that skills and training do not equate to new jobs.
They say it will mean nothing without extra money and a revitalised domestic supply chain to build all the green technology needed, from fibreglass wind turbines to aluminium sub-sea cables.
Sharon Graham, the Unite general secretary who has threatened to cut ties with Labour over its policy to end North Sea oil and gas drilling and watering down of a ban on zero-hours contracts, welcomed the “initial steps” but called for “an equally ambitious programme of public investment”.
Professor Paul de Leeuw from the Energy Transition Institute in Aberdeen said the plan was “genuinely new and different”, and had for the first time joined up relevant information and strategies in one place.
But “you can’t train people for jobs that aren’t there”, he added, also calling for an investment plan.f
Reform heartlands could benefit from Labour’s jobs plan
The boom in clean energy jobs stands to benefit Reform heartlands along the east coast of Britain.
That fact is more by luck than design, given the east coast’s proximity to offshore wind farms and carbon capture and storage fields in the North Sea.
Reform promises a radically different vision for the country’s future, based on reopening coal mines and maxing out nuclear power and what’s left of North Sea oil and gas to boost jobs and the economy.
Its deputy leader, Richard Tice, objects to land being used for solar panels and pylons.
Government modelling forecasts an additional 35,000 direct jobs in Scotland, 55,000 in the East of England and 50,000 in the North West.
To keep the unions sweet, the government will also have to follow through on its pledge to boost the rights of those working offshore in green energy.
A current loophole gives protections like the minimum wage to oil and gas workers in UK territorial seas, but not to workers in the clean energy sector.