Morning Report: New Home Sales highest since 2007 1/27/16

Stocks are lower this morning on lower oil prices and disappointing numbers out of Apple last night. Bonds and MBS are down small.

The FOMC will announce their decision at 2:00 PM EST today. No change in the Fed Funds rate is expected. Bond bulls are going to be looking for a mention of the recent market volatility or oil prices and the path of future inflation. Bond bears will be looking for no mention of oil / volatility and / or language that characterizes these effects as transitory.

New Home Sales increased to 544k in December from 491k the month before. The Spring Selling season is just around the corner. For the full year, new home sales increased 14.6% to 501,000, the highest level since 2007. Interestingly, the median sales price fell 4.3% to $288,900. D.R. Horton’s product mix has mirrored that somewhat, with the Horton Express (starter homes) becoming a bigger share of revenues while Emerald (McMansions) has fallen.

Mortgage Applications rose 8.8% last week as purchases rose 4.6% and refis rose 11.3%.

Weakness in the overall economy depressed sales for Apple. They are seeing it especially in Asia between China and Hong Kong. China is going to be exporting deflation, which is going to make the Fed’s job tougher.

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