Morning Report – Housing data dump 6/24/14

Vital Statistics:


Last Change Percent
S&P Futures 1950.4 -2.6 -0.13%
Eurostoxx Index 3284.3 1.8 0.05%
Oil (WTI) 106.1 0.0 -0.03%
LIBOR 0.234 0.001 0.43%
US Dollar Index (DXY) 80.26 -0.017 -0.02%
10 Year Govt Bond Yield 2.60% -0.03%
Current Coupon Ginnie Mae TBA 106.5 0.0
Current Coupon Fannie Mae TBA 105.6 -0.1
BankRate 30 Year Fixed Rate Mortgage 4.21


Markets are lower this morning on no real news. Bonds and MBS are up small. Philly Fed Head Charles Plosser said that he could see 2.4% GDP growth for the rest of the year and more slack taken out of the labor market.
New Home Sales spiked to 504k in May, much higher than the 439k estimate. The median sales price of a new home was 282k and the seasonally-adjusted estimate of new homes for sale was 189,000, or about 4.5 months’ supply. This Friday, we will hear from homebuilder KB Home when they report second quarter earnings.
Consumer Confidence rose to 85.2 form 83 last month, and higher than the 83.5 forecast on the street. This is the highest level since January 2008. Perceptions on the economy and the job market are improving, although they are still highly negative.
The Richmond Fed Manufacturing Index came in stronger than expected. We are seeing pricing pressures build. Prices paid (the cost of inputs) rose at a 1.11% rate, while prices received rose at a .37% annualized rate. Eventually producers will pass those increases on, which will eventually get inflation closer to the Fed’s comfort zone.
Home prices were flat month-over-month in April, according to the FHFA. On a year-over-year basis, they were up just shy of 6%. Prices are back at July 2005 levels.
Home prices posted an 11% gain, according to Case-Shiller. Home price appreciation is leveling off.
And if that weren’t enough, The Black Knight Financial Services Home Price Report has prices up .9% month-over-month and up 6.4% year-over-year.
The reason for the difference between the reports? FHFA covers only sales with a conforming mortgage, while Case-Shiller covers everything. The Black Knight report uses an algorithm to correct for distressed and short sales. Regardless of the index you use, the easy money has been made in home price appreciation and now we should see house prices begin to track wage growth again.
Treasury Secretary Jake Lew is expected to announce expanded programs to help struggling mortgage borrowers on June 26. The new aid will “build on previous administration initiatives that helped stabilize the housing market.” Treasury said. We know that the administration is considering a program for the first time homebuyer that gives a break on MI payments if they borrower goes through counseling. I doubt that we are going to see something dramatic like an expansion of HARP eligibility dates. The administration also seems to think that easing buyback requirements will loosen credit. It may, it may not. As noted in the article, if it were a game changer, Obama would be announcing it himself, not having Lew do it at a housing conference.
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