Morning Report: Existing Home Sales rebound in September 10/22/15

Posted on October 22, 2015 by Brent Nyitray

Stocks are higher this morning after ECB President Mario Draghi signaled that the central bank may use more stimulus to counteract a weakening Eurozone. Bonds and MBS are down small.

Existing Home Sales rose 4.7% in September to 5.55 million. This is up 4.7% month-over-month. The median existing home price was $219k, up 6.1% from a year ago. Housing inventory dipped again to 2.21 million homes, which represents a 4.8 month supply, down from 5.1 months in August. Tight inventory remains an issue – 6.5 months is considered a balanced market. First-time buyers continue to sit on the sidelines, as their percentage fell to 29%. This is flat with a year ago. 40% is more or less the historical average.

The Chicago Fed National Activity Index was more or less flat at -.37 in September. The 3 month moving average was zero, which means the economy is growing pretty much on trend. The index can be volatile, but the trend in the last few months is distinctly downward.

Confirming the CFNAI trend, the Index of Leading Economic Indicators fell by 0.2% in September. The Conference Board is forecasting GDP growth of around 2.5% over the next couple of quarters.

Initial Jobless Claims rose to 259k last week. We are still bouncing around 40 year lows in this number.

The Bloomberg Consumer Comfort index fell last week to 43.5 from 45.2.

The FHFA House Price Index rose 0.3% in August. We are now within 1% of the peak level set in March of 2007. This index only looks at houses with conforming mortgages, so it will be a little different than Case-Shiller or CoreLogic.

The number of underwater homeowners is still elevated at 14 million, but that number is falling.There are 6.9 million homeowners who are “seriously underwater” or are down by over 25%, but that number has been cut almost in half from the worst point of the crisis. Equity rich homeowners are declining as well, as many use a cash out refi to pay off credit card debt.

FICO scores ticked down a touch to 723 in September, according to Ellie Mae’s Origination Insight Report. Time to close ticked down as well, but we should start seeing that increase due to TRID.

CFPB director Richard Cordray told the MBA conference that the rollout of TRID has not been smooth. Closings are being delayed and consumers end up paying for an extra two weeks of lock protection. Cordray’s reply: “These claims reflect a failure or perhaps a refusal to understand what the rule actually says.” Cordray didn’t lay it all on lenders – vendors also shoulder some of the blame.

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