All Things in Moderation

Was at the MBA conference Monday and Tuesday, so no report the last two days. People are still buffaloed by regulation. They staged a debate between David Axelrod and Laura Ingraham. She got in some digs on Hillary, but there was no discussion of regulation in the financial sector, which was a shame. Met someone from Fannie Mae who is trying to get lenders to make sub 600 FICO loans and is struggling to get lenders to go there. The government simply has no clue how lenders think…

Stocks are lower this morning on Fed worries and emerging market woes. Bonds and MBS are flat

We will get the minutes from the April FOMC meeting today at 2:00 pm EST. The markets have been focusing like a laser on any sort of Fed-speak, so this could present the possibility of some volatility in the bond markets. Just be aware.

Yesterday, Atlanta Fed President Dennis Lockhart and San Francisco Fed member John Williams said that two hikes this year may be the proper course.

Mortgage Applications fell 1.6% last week as purchases fell 5.8% and refis rose 1.4%.

We had some housing data earlier this week. First, the NAHB Housing Market Index was steady at 58. This is the homebuilder sentiment index. After peaking in late 2015, it has fallen slightly. Builders are certainly happy with mid single-digit increases in average selling prices, but they aren’t pumping out more units yet.

The drop in sentiment is evident in housing starts, which continue to be mired in the 1.1 million to 1.2 million unit range. In April, starts rose to 1.17 million from an upward-revised 1.1 million. Building permits rose to 1.1 million. It is amazing that we have such low inventory of homes and yet starts are around 25% less than historical, pre-bubble numbers. That is even more dramatic when you factor in population. We have only approached the lows from the 81-82 recession, which was a bad one.