Morning Report: Housing Affordability falls 9/22/15

Stocks are lower this morning on overseas weakness and slumping commodity prices. Bonds and MBS are up.

Slow news day.

House prices rose  0.6% in July, according to the FHFA. They are now within 1.1% of their March 2007 peak. The Mountain states performed the best, while the Northeast performed the worst.

The Richmond Fed Manufacturing Index fell in September. The strong dollar is hurting manufacturing.

Scott Walker dropped out of the Republican presidential campaign yesterday. His staffers went to the Rubio campaign, which tells you how the pros are reading the tea leaves with respect to the Republican presidential nomination.

Housing affordability is the lowest since 2008, as the median house price to median income ratio becomes stretched again. Affordability peaked between 2011 and 2013, however professional investors were the ones in a position to take advantage of it. Credit conditions continue to improve, but are still a fraction of what they were pre-crisis.

The big banks are backing away from the FHA market, citing regulation and worries about giving loans to 520 FICO borrowers who only put 3.5% down. Separately, Ginnie Mae is worried about the fact that small independent mortgage bankers are filling the void left by the big banks. The industry is concerned that the big bank withdrawal is hurting the housing recovery.

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