Morning Report: D.R. Horton’s bet on the first time homebuyer is paying off 1/26/16

Stocks are higher this morning in spite of another down 7% day in China overnight. Bonds and MBS are flat

House prices continue to rise, according to the FHFA House Price Index and Case-Shiller. The FHFA House Price index rose 0.5% MOM, while Case-Shiller rose .94%. The Case-Shiller index is up 5.83% YOY. The FHFA House Price Index has recouped all its post-bubble losses.

In other economic data, the Richmond Fed Index slipped while consumer confidence increased.

The Fed starts their 2 day FOMC meeting today. The decision is expected tomorrow at 2:00 PM EST.

Homebuilder D.R. Horton reported earnings yesterday and met Street expectations. Orders increased 9% in units and 12% in value. Backlog is up 15% at 10,665 homes. The company is “Well-positioned” for spring selling season, FY 2016, given backlog, “positive sales trends” in Jan., “robust” lot supply, inventory of homes available for sale according to Donald R. Horton, chairman of DHI. Their new brand for first time homebuyers – Horton Express – accounted for 22% of sales last quarter.

D.R Horton said that the Houston market was softening as oil continues to fall. State-by-state employment figures show that the collapse in oil prices is now being felt in the fracking states.

Foreign money helped prop up the ultra-luxury sector of the real estate market and now they pulling back. Prices are stagnating and homes are not moving. Blame the stock sell-off in China, and the oil price collapse which is hurting Middle Eastern and Russian investors.

9 Responses

  1. Frist!

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  2. Why shouldn’t Universities be equally liable for student loans?

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  3. Our son and family in CO are buying a new home in Longmont, CO and guess what…it’s a D.R. Horton home……….they’re pretty excited and it should be done sometime in June!

    Both daughters also bought homes last year………first ones for them. Unfortunately, daughter #2’s home is tied to not only her income, which is secure in the oil industry for now…but her fiance’s as well, and he may be looking at a lay off even though he doesn’t work directly for the industry………the parent company does. Uggghhhh

    To my runner friends here……….Brent and Michi (anyone else?), I’m working through a “frozen shoulder” injury from lifting weights and can’t swim or do much upper body lifting for probably 2 months so I started running on Jan 11th. I ran the horse trail here for 2.5 miles yesterday but I’m wondering if you have any pointers for a relatively new runner……….what’s more important……..shoes or stretching……..that sort of thing and how quickly can I add miles on?

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    • Lulu – a pointer from a farm boy – when running a horse trail, watch for big turds.

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    • Re running, I would say the biggest thing is that your cardiovascular system is able to take additional stress faster than your joints can, so it is easy to push yourself too hard. The rule of thumb is increase your mileage by 10% every 3 weeks or so.

      I generally do not stretch before running. Some people get a benefit from it, while others don’t. Shoes matter, but good form matters more. Try and avoid heel striking which transfers the force from hitting the ground straight up your spine..

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  4. Illuminating interview with Obama in Politico. He still refuses to take responsibility for anything bad:

    ““The truth is, in 2007 and 2008, sometimes my supporters and my staff, I think, got too huffy about what were legitimate questions she was raising,” he admitted. “And there were times where I think the media probably was a little unfair to her and tilted a little my way in calling her out.””

    No, it wasn’t your staff gone rogue. It was a deliberate strategy that you signed off on.

    And of course, Not His Fault ™:

    “Obama gives less ground when it comes to his own performance as president — repeating the message, from last month’s State of the Union address, that he’s “very proud of what we’ve gotten done over these last seven years” and that his “singular regret … is the fact that our body politic has become more polarized,” a situation he attributes to the actions of others — hyperpartisanship on the GOP side, gerrymandering, the media, super PACs.”

    http://www.politico.com/story/2016/01/obama-iowa-2016-sanders-off-message-218166

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