Morning Report: Pending Home Sales fall 4/27/17

Vital Statistics:

Last Change
S&P Futures 2385.0 2.8
Eurostoxx Index 387.6 -1.2
Oil (WTI) 48.7 -0.9
US dollar index 89.7  
10 Year Govt Bond Yield 2.31%
Current Coupon Fannie Mae TBA 102.63
Current Coupon Ginnie Mae TBA 103.68
30 Year Fixed Rate Mortgage 3.98

Stocks are mixed this morning as markets digest the ECB non-move. Bonds and MBS are down small.

Pending Home Sales fell 0.8% in March as tight inventory reduced transactions. On a YOY basis, they are up 0.8%, as February was an unusually strong number. NAR chief economist, says sparse inventory levels caused a pullback in pending sales in March, but activity was still strong enough to be the third best in the past year. “Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” he said. “In most areas, the lower the price of a home for sale, the more competition there is for it. That’s the reason why first-time buyers have yet to make up a larger share of the market this year, despite there being more sales overall.”

Durable Goods orders rose 0.7% in March, lower than the 1.1% estimate. Ex transportation and defense, they rose 0.1%. Capital Goods orders, which is a good proxy for business capital investment, rose 1.2%. Yet another data point where the hard data isn’t confirming the buoyant soft data.

Initial Jobless Claims rose slightly to 257k last week, while retail inventories rose 0.4% and wholesale inventories fell 0.1%. The consumer comfort index edged up as well.

Regular readers of this blog know I have been discussing the post-Trump interest rate sell-off for months. I lay out the full case in the latest issue of the Scotsman Guide: Finding Comfort in History. I discuss why the Fed might not move 3 times this year (because they have invariably been high in their GDP estimates), why a 75 basis point move in the Fed Funds rate won’t necessarily translate into a 75 basis point hike in mortgage rates (because the yield curve usually flattens), and why the end of QE reinvestment won’t have a dramatic effect on mortgage rates.

Trump’s tax plan which was unveiled yesterday was really more of a guidance to Congress than an actual plan. FWIW, legislation originates in Congress, not the White House, so it is unrealistic to expect a detailed, CBO-scoreable plan. That said, we know that the basis plan will be to reduce the number of tax brackets, lower the rates, increase the standard deduction, and to limit itemized deductions. What does that mean for real estate? Nobody knows for sure, but the National Association of Realtors is weighing in already, urging the government to maintain the mortgage interest deduction and the state / local tax deductions. Trump’s plan will probably ding upper middle class homeowners in high tax states the hardest.

20 Responses

  1. More left-wing media navel gazing. Why can’t they just accept that they are partisan liberals and be done with it? The Guardian makes no bones about its leftism. Why shouldn’t the NYT?

    http://www.slate.com/articles/business/moneybox/2017/04/the_media_s_bubble_problem_is_really_a_diversity_problem.html

    Like

  2. Interesting read, once you get past the obvious “white people only due this sort of thing due to racism” bias.

    “Porter turned Sandy Springs into a kind of free-market Disneyland, outsourcing every possible municipal service he could to private industry in both the United States and abroad. Aside from its police and fire departments, Sandy Springs has only eight public employees—half of whom oversee the city’s relationships with the private companies that provide its services. (Georgia state law requires that schools be run at the county level.) At one point, a company from San Francisco collected the trash, a company in England gave out business licenses, and a business based out of Pasadena, California, ran the city’s court system.

    No longer so beholden to the rest of Fulton County, Sandy Springs has dramatically improved its services without raising taxes. Visitors to the city can even take a tour of its municipal ingenuity, which features a stop at the city’s high-tech traffic-control center. In 2010, Sandy Springs was named a runner-up in the “Better Government Competition” held annually by the Pioneer Institute, an influential free-market think tank. Sandy Springs is now home to the headquarters of more Fortune 500 companies than the city of Atlanta, despite being, by population, less than a quarter of its size.”

    https://www.theatlantic.com/business/archive/2017/04/the-border-battles-of-atlanta/523884/

    Liked by 1 person

    • It never dawns on these people that if something sounds too god to be true, it probably is…

      Like

      • They want it to be true. It validates them.

        The best part is Yglesias refusing to walk it back. Even if it’s factually wrong, for him, it’s still true.

        That’s what the larger public and especially Trump voters perceive about the media, the facts are secondary to the greater truth of the narrative.

        It’s been there even in “objective” pieces ever since they started grading news writing as literature in the Pulizers. I.e. long form pieces that are Dickensian and judging it on public impact of the writing. But the pure political bias has accelerated.

        Like

  3. Baby, why you make me hit you? Part II

    http://hotair.com/archives/2017/04/27/__trashed-9/

    What if we told a rape victim that she was asking for it by wearing such a short skirt?

    Like

  4. Like

    • “‘Has there ever been an organization in human history that is dedicated, with such commitment, to the destruction of organised human life on Earth?'”

      Except that they can’t even pass a spending bill at this point.

      Like

    • “‘Has there ever been an organization in human history that is dedicated, with such commitment, to the destruction of organised human life on Earth?’”

      The Communists were just well-intentioned people who went a little overboard.

      Like

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