Homebuilder sentiment nudged a little higher on Monday. There are signs that it could be ready to breakout of its tight 2016 range. The three major components of the report all improved month-to-month as six-month expectations were at its highest level since last November.

The Housing Market Index (HMI) stall began last year; this is a dynamic index that peaked in 1998 at a reading of 78, and plunged to a low reading of 8 in January 2009.

Yesterday, there was more evidence to show that the housing market continues to build momentum, as it starts climb to its highest level since February.   The news was buttressed by record quarterly revenue and earnings at Home Depot (HD), which raised its full-year financial guidance.

However, a closer look at the data underscores the future economic challenge of the nation based on changing mindsets over family formation.  Permits for single-family houses barely improved, but multifamily permits surged to an annual pace of 411,000 after dipping to 318,000 in March. 

In January 1993, multifamily housing permits were less than 8% of single-family homes; last month, they were 36%.  Meanwhile, the first quarter of 2016 saw the lowest fertility rate ever since the government began compiling this data back in 1909.

Young people are delaying family formation and the American dream of living in a suburban house with a white picket fence to live in bulging cities. This will not only have a major negative impact on the economy in the future, but it also will tilt the political map as well. I still expect a portion of Millennials to opt for the suburbs if for no other reason than the cost alone.  In addition, many current suburbs will morph into mega-cities that have always been part of the progressive dream.

Greenback’s Struggle

The U.S. dollar continues under pressure, and soon could land around 94, which is a huge support point that must hold.  If it fails, we could see a swoon to multi-year lows.  Actually, this would be great news for multinational companies which have hinted at leadership roles all year long.

Today’s Session

It’s been a mixed bag of retail earnings as big names Target and Lowe’s, have disappointed, while Urban Outfitters and Children’s Place blew away consensus. Part of this story is the story of brick and mortar’s life and death battle with online retailing, especially Amazon.