Morning Report: House prices rise 5% 10/27/15

Stocks are lower this morning as the Fed begins their two day FOMC meeting. Bonds and MBS are up small.

Another sign the economy is slowing down: Durable goods orders fell 1.2% in September, and are down 0.4% ex-transportation. Capital Goods orders (a proxy for business capital expenditures) fell 0.3%. As a result of these numbers, Goldman took down their Q3 GDP estimates to 1% from 1.2% and JPM took theirs down to 0.6%.

The Markit US Composite PMI slipped to 54.5 from 55 in October and the Services PMI fell from 55.1 to 54.4.

Consumer confidence fell in October to 97.6 from a downward-revised 102.6 in September.

The S&P/Case-Shiller Home Price Index rose 0.11% in August and is up 5.1% year-over-year. They make this point about home price appreciation: “A notable part of today’s economy is the continuing low inflation rate; in the year to September, consumer prices were unchanged. Even excluding food and energy, the core inflation was 1.9%. One result is that a 5% price increase in the value of a house means more today than it did in 2005-2006, the peak of the housing boom when the inflation rate was higher. The rebound from the recent lows was faster than the 1997-2005 housing boom, and also much less driven by inflation.”

Supposedly there is a deal to prevent a government shutdown. The sequester is lifted, and the carried interest deduction goes away. This should clear the decks for Paul Ryan to take over as Speaker of the House. This deal will probably get unanimous Democratic support, but it might be hard to get the necessary 30 Republican votes.

How to get the Millennials to buy houses? NAR had a symposium on that recently, with HUD Secretary Julian Castro speaking. He lamented the tight credit in the mortgage market. The aftermath of the housing bubble has sent homeownership rates to the lowest levels in almost 50 years.

11 Responses

  1. Frist!

    I wonder if it’s tough to sell Millenials on the idea of home ownership because they’ve discovered that it’s easier to be more mobile?


  2. around here they are getting outbid by boomers. so i can laugh at that.


  3. I think the Millennial generation needs a few years of a decent economy to feel comfortable buying…


  4. Hard to come up w/ 30-40k.


  5. FHA loans only require 3.5% down


  6. Fair point. The median home price in Houston is $221,000, at 3.5% that’ still $7500.


  7. Looks like the two year spending hike is actually $112 billion.


  8. Some of it may be correlated with marriage rates:

    A 10% decline from Gen X to Gen Y (that is, from 36% to 26%). I’ve had (mortgages on) 3 houses over the past 21 years, and I’m not sure I’d have done that without being married, having kids, that sort of thing. So there’s at least 10% of the discrepancy right there!


  9. Prolly true.


  10. Does he actually think he’s fooling anyone?

    “Paul Ryan Mad About Budget Bill His Staff Helped Write
    “Paul Ryan’s staff was involved in crafting the provision for weeks.”
    Arthur Delaney
    Senior Reporter, The Huffington Post

    Posted: 10/27/2015 03:12 PM EDT | Edited: 52 minutes ago”


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