Morning Report: The median house price hits a record 7/22/15

Stocks are lower as earnings have been generally disappointing. Bonds and MBS are up small.

Earnings season is off to a lousy start, highlighted by a miss from Apple. The stock is down 8% pre-open. IBM and United Technologies (which is selling its Sikorsky unit to Lockheed) reported disappointing earnings as well. The NASDAQ has been hitting records lately (it finally eclipsed its early 2000 high), but earnings are looking like a headwind.

Existing home sales rose 3.2% to a seasonally adjusted annual rate of 5.49 million units, the highest number in 8 years. Lawrence Yun, NAR chief economist, says backed by June’s solid gain in closings, this year’s spring buying season has been the strongest since the downturn. “Buyers have come back in force, leading to the strongest past two months in sales since early 2007,” he said. “This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that’s giving more households the financial wherewithal and incentive to buy.”

Inventory remains tight as a drum, with 5.0 month’s worth of inventory, well below the 6.5 months that historically represents a balanced market. Time on market hit a record low of 34 days, down from 40 in May. The first time homebuyer represented 30% of sales, down from 32% in May and below its historical run rate of about 40%. All-cash sales fell to 22%, the lowest since December 2009.

The median house price rose to $236,400 a new record. Yes, we have surpassed the heights of the bubble years. That puts the median house price to median income ratio at a sporty 4.4x, well outside its traditional range of 3.15x – 3.6x and not far off its record of 4.8x. Either wage growth gets on its horse or further home price appreciation is going to be hard to come by.

Mortgage Applications rose 0.1% last week as purchases rose 1% and refis fell .5%. The 30 year fixed rate mortgage has been stuck at 4.23% for the last 3 weeks.

House prices rose 0.4% in May, according to the FHFA. On a year-over-year basis, prices are up 5.4%. Home prices are now about 1.8% from the peak in 2006. Note that this index only considers homes with conforming / government mortgages, so it excludes the jumbos and cash sales. While home price appreciation is accelerating nationwide, it is actually decelerating in the markets that have lagged the most – the Northeast and the Mid-Atlantic states. It has truly been a tale of two markets, with the red-hot West Coast and the ice-cold East Coast. That may be a result of increasing foreclosure activity in the Northeast / Mid-Atlantic judicial states.

Washington is looking for a way to fund infrastructure spending without raising the gasoline tax. It looks like at least one possibility would be to extend the 10bp Fannie Mae G-fee to 2025 from 2021. Banks may also see less dividend income on the shares of regional Fed bank stock they must hold.

Freddie Mac’s latest Housing Market Insight and Outlook is out, along with their forecasts for 2015 and 2016. 2015 GDP is forecast to be 2.2%, while 2016 is forecast to be 2.7%. The 30 year fixed rate mortgage is expected to be 4.0% for 2015 and 4.9% for 2016. Originations are expected to fall from 1.35T to 1.27T. They discuss why low downpayment loans are less risky now than they were in the bubble days.

35 Responses

  1. NoVA – What’s up with the highway bill?


  2. Same story … it’s partially offset, so the conservatives are balking. and the Ds say they didn’t have time to read it. and it looks like it might be an open amendment process. but that’s TBD.

    weekened session. I suspect they’ll get it hashed out.

    so, right now, there are no votes scheduled, but the second they get to 60, McConnell will file for cloture to get that clock started.


  3. Ex-Im still in it?


  4. Looks like the Waco biker shootout story is falling apart.

    “Waco Is Suppressing Evidence That Could Clear Innocent Bikers

    The city is fighting to keep videos of the May shootout at the Twin Peaks restaurant out of the press, and still hasn’t confirmed how many victims were shot by police.

    Conor Friedersdorf Jul 21, 2015”


  5. the text of the amendment in a nature of a substitute that i’ve seen does not have it. but that doesn’t mean it’s not going to be added.


  6. Like

  7. It’s official. we’ve reached Peak Derp.


  8. we can exceed the nonsense in that disclaimer. that might take us to Ludicrous Speed.


  9. Anything I can get at a Walgreen’s should be covered by my insurance. Why should I have to pay for aspirin or bandaids? These are right guaranteed me by the 14th amendment! Or maybe the 15th. Or something.

    Doesn’t access to free bandaids and muscle rub become a free speech issue at some point? Look, let’s skip the details: what has to happen to have someone else pay for everything I need that even remotely resembles healthcare?

    Seriously, why am I still paying for my own toothpaste? What kind of oppressive, medieval era am I living in?


  10. Pretty weak tea, Kevin.



  11. why do you baggers hate women?


  12. I think I should create a #SocialJusticeWarrior comic strip, just to make fun of all this stuff…


  13. “Anything I can get at a Walgreen’s should be covered by my insurance. Why should I have to pay for aspirin or bandaids? These are right guaranteed me by the 14th amendment! Or maybe the 15th. Or something.”

    Don’t forget beer.


  14. “Pretty weak tea, Kevin.”

    I’m serious, FB. I want someone else to pay for everything I get at the CVS or Walgreens that is remotely healthcare related. Why wouldn’t I?

    When I think of it, it would be even better if someone would just give me a million dollars for general awesomeness.

    … or, put another way, it’s my way of saying I find the argument that free tampons will somehow help to bridge the gender inequality gap to be weak tea, myself. Assuming that isn’t a fake article. I have a hard time believing it’s not parody.


  15. @jnc4p: “Don’t forget beer.”

    I’m not sure the blue laws are the same in every state, nor is every drug store policy regarding tobacco and alcohol. I could see there being some inequality in the distribution of beer access under such a program.


  16. @Brent: “why do you baggers hate women?”

    Marriage will do that to you.



  17. Keep seeing over at DKos and TPM that the Planned Parenthood tapes are fraudulent. I have t watched them and they don’t say what’s fraudulent about them. Anybody know?


  18. Heavily edited. Which is always a mistake when trying to do an expose. Just show the whole video!


  19. It’s my understanding that the whole videos were released as well, within 30 seconds of the highlights reel. If so, where is the fraud?


  20. What was omitted. Good analogy is the setup to the comments Trump made about McCain.


  21. Not fraud. Slightly misleading. A bit if editorializing through editing. The full video just makes things look bad, rather than terrible. Sort of.


  22. So, if the full videos are available, and my understanding is that they are, what is fraudulent?


  23. That they also released an edited version! And they didn’t tell PP they were filming them. Also fraudulent, apparently.


  24. Like

  25. This definitely proves AGW!


  26. “Every satirist should aspire to such admiration from the state.”


    “Canadian Global Warming Arctic Expedition Derailed Due to Heavy Ice”

    Also ironic!

    … though to be fair, the description has been changed to climate change so that anything related to the climate that makes anything difficult is a sign of impending man-made doom.


        • Scott, if your point is that NASA was hyping its claim, then point taken. If your point is that the Earth is not getting warmer, then I disagree.

          It seems to me there is room for skepticism about both the causes and the future extent of the warming, but not room to argue intelligently that it is not happening.

          There is room to be concerned that there are too many causes of warming to fix with a reduction of carbon emissions. Methane from cattle comes to mind, whenever I am outside the city. Rapid urbanization itself creates hot spots. Macadam pavement creates hot spots.

          There are good reasons to like modular nuke plants, especially thorium reactors; and wind generators, and solar plants, and NG as substitutes for coal, aside from carbon fears. But I am not convinced that eliminating coal as a power source would stop the warming trend. As I say, a lot of other stuff is going on.

          But planning for a future in which more of our coast is under water seems a no brainer and still relatively trivial, given a fifty year time frame. Don’t offer flood insurance to new buildings on Galveston Island would be a start.


        • Mark:

          Scott, if your point is that NASA was hyping its claim, then point taken.

          My point was twofold. One, you should be skeptical of all alarmist “hottest ever” claims. And two, you shouldn’t trust NPR (among many, many others) to provide you with objective, non-partisan news. It has an agenda and it pushes it. Part of that agenda is climate change alarmism.

          It seems to me there is room for skepticism about both the causes and the future extent of the warming, but not room to argue intelligently that it is not happening.

          Well, actually there has been a well recognized “pause”, even among the alarmists who work furiously to explain it away. But beyond that I agree. The relevant issues, about which there is definitely a lot of room for disagreement is both the cause of any warming and the extent to which it might continue in the future. I would also add, perhaps even more importantly, whether any such future warming will prove to be a net benefit or cost. Tough, though, to have discussions about such things when any opposition to alarmist’s preferred policies is conflated as warming “denial”.


  27. It’s almost like they’re trying to manipulate public opinion!


  28. Gotta love it. A yellow sheet tabloid is now objective reporting.



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