Morning Report: New Home Sales fall 9/26/16

Vital Statistics:

Last Change
S&P Futures 2149.0 -9.0
Eurostoxx Index 340.6 -5.0
Oil (WTI) 45.0 0.5
US dollar index 86.4 -0.2
10 Year Govt Bond Yield 1.60%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.49

Markets are lower this morning on no real news. Bonds and MBS are down

Home prices rose 0.5% MOM and are up 5.8% YOY, according to the FHFA House Price Index. Home price appreciation is the highest in the West and Mountain states, while the Northeast and Middle Atlantic are bringing up the rear.

Existing Home Sales fell 0.9% in August as tight inventory depressed transactions. The median home price was just over $240,000 which was a 5.1% YOY increase. Housing inventory was down to just over 2 million homes, which is a 4.6 month supply. First time homebuyers accounted for 31% of sales. Strong job growth and low mortgage rates are pumping up demand, but builders remain reticent.

The Index of Leading Economic Indicators fell 0.2% last month, lower than expectations.

New Home Sales came in at an annualized rate of 609k, a little better than expected, but below last month’s 659k pace. The median sales price of new houses sold in August 2016 was $284,000; the average sales price was $353,600. The seasonally adjusted estimate of new houses for sale at the end of August was 235,000. This represents a supply of 4.6 months at the current sales rate.

Central Banks are dumping Treasuries, which is putting pressure on bonds, even thought the latest economic data is on the weak side. US investors (especially bond funds) are on the other side of the trade. This is also a warning to investors to take a look at their bond funds and determine how much interest rate risk they are bearing.

Minneapolis Fed Head Neel Kashkari did a Twitter Q&A about monetary policy. He is worried more about deflation than inflation and doesn’t see a bubble in housing.

Tonight, candidates Hillary Clinton and Donald Trump will have their first debate. The latest poll numbers show a dead heat, and a Trump lead when third party candidates are included. Note that the debate will be up against Monday night football, so all the post-debate polls will skew female which will be more favorable for Hillary than Trump.

22 Responses

  1. On internet security for accountants and lawyers:

    My wife’s internet and data security insurance provider sent her renewal forms for 2017 this morning. Except they sent her the renewal forms for a CO law firm, including their gross revenues.

    Rosanne called the carrier to report that she required a correct renewal form and explained what she had received. The reply was silence – then “oops.” Really.



  2. Yeah, but will it be able to marry its own child? That’s the real test of tolerance.

    Or is that a nogo because it triggers the left’s “ick” factor?


  3. Sue passed away early this morning. She was comfortable and at peace, and I had a chance to talk to her briefly last night.

    I haven’t said anything on PL yet; I’m going to wait till tonight to avoid the daytime troll traffic, although I let Greg know.


  4. Apparently my reasoning for rejecting HRC is the same as Scott Adams’:

    “Why I Switched My Endorsement from Clinton to Trump
    Posted September 25th, 2016 @ 12:41pm

    Given the uncertainty about each candidate – at least in my own mind – I have been saying I am not smart enough to know who would be the best president. That neutrality changed when Clinton proposed raising estate taxes. I understand that issue and I view it as robbery by government.”

    Liked by 1 person

    • I just want to see the meltdown on cable news if he wins. beyond that? haven’t put too much thought into it.

      Liked by 1 person

    • jnc (from Adams):

      I understand that issue and I view it as robbery by government.

      I wonder how Adams distinguishes between Hillary’s proposed change in the estate tax and her proposal for a 4% surcharge on incomes over $5mm, such that the former is “robbery by government” and enough to push him over the edge on HRC, but the latter, which she proposed fully 8 months ago, was not.

      The estate tax proposal, to me, is just one manifestation, and an entirely unsurprising one, of an ideology and policy inclinations that anyone even halfway familiar with Clinton should already have known was essential to her politics. It can hardly have come as a surprise that HRC wants to soak the rich.


  5. Vox at least contemplates the prospect that Trump could pull it off.

    I actually see him outperforming the polls due to the stigma. If he’s within 1 or 2 % on Election Day then I see him pulling it off.

    His polling results, even when he’s still down, seem to motivate his supporters and depress the HRC camp.

    Liked by 1 person

  6. Liked by 1 person

  7. Anyone else think that lectures from a British comedian on who to vote for are starting to backfire?

    Liked by 1 person

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