Morning Report: Pending Home Sales fall 6/28/17

Posted on June 28, 2017 by Brent Nyitray

Vital Statistics:

Last Change
S&P Futures 2424.0 3.5
Eurostoxx Index 384.6 -1.4
Oil (WTI) 44.1 -0.2
US dollar index 88.3 0.0
10 Year Govt Bond Yield 2.21%
Current Coupon Fannie Mae TBA 103
Current Coupon Ginnie Mae TBA 103.81
30 Year Fixed Rate Mortgage 3.91

Stocks are up this morning after the ECB said that they will continue to stimulate the economy. Bonds and MBS are down

Last week was bad for mortgages as applications fell 6%. Purchases were down 4% and refis were down 9%. The index was up 10% from a year ago, however. The refi share fell a point to 45.6%. Note that applications have an income skew: starter home buyers are still aggressive, while it is the jumbo space that is taking a breather.

Pending Home Sales fell 0.8% in May, which was the third consecutive monthly decline. Lawrence Yun, NAR chief economist, says it’s clear the critically low inventory levels in much of the country somewhat sidetracked the housing market this spring. “Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales,” he said. “Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.”

As demand for mortgages falls and competition increases, lenders are looking to ease lending standards to capture business, according to the latest Fannie Mae Lender Sentiment Survey. The net share of lenders reporting demand growth fell to a 2 year low, while the number of lenders who expect to ease standards rose to a 2 year high.

More on inventory woes. Trulia found that over the past year, the inventory of starter homes has fallen by 16%. The inventory of move-up homes has fallen by 13%, and the number of luxury homes has fallen by 3.9%. Inventory is so tight in California that only 25% of the homes for sale remain on the market for over 2 months. Trulia’s recommendation to buyers: Move fast, make multiple offers, and be willing to adjust to the seller’s timetable.

Redifin looked at 11 metro areas and found that 33% of the people who bought a home in the past year made an offer without visiting the property. Note to LOs who are worried about rates: Only 5% of the respondents said they would cancel their purchases if mortgage rates topped 5%. The metro areas were Baltimore, Boston, Chicago, Dallas-Fort Worth, Denver, Los Angeles, Portland, San Diego, San Francisco, Seattle and Washington, D.C.

A new ransomware attack is hitting Europe. It is similar to the Wanna Cry attack a few months ago. So far it has not been reported in the US, but it has hit big European companies like advertising giant WPP and shipper Maersk, which has shut down shipping terminals worldwide. The cost to decrypt your machine is $300 in bitcoin. Obviously don’t open suspicious attachments – and also note that the hackers are getting better and better at disguising these attachments. For example, an email might appear to be coming from a vendor you work with frequently, but if you check the actual email address it is clear that it isn’t actually from that vendor.

Separately, it is good news the hackers are asking for a fixed dollar value of Bitcoin, since is has been on a tear the past couple of months.

Janet Yellen said that another 2008 style crisis is not likely in our lifetimes. While she attributes that to regulation and increased capital, the real reason is that only residential real estate bubbles cause this sort crisis. Residential real estate bubbles are the Hurricane Katrinas of banking and economics, and they really only come around ever few generations. That said, we will undoubtedly see another 2008 style financial crisis – it just won’t be in the US. China has an immense real estate bubble and is trying to find a way to deflate it slowly. Canada has one as well, although it is probably tied pretty closely to Chinese money.

MBA head Dave Stevens and ex-FHFA head Ed DeMarco will testify in front of the Senate today on housing reform.

Filed under: Economy, Morning Report |

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23 Responses

  1. Brent Nyitray, on June 28, 2017 at 3:02 pm said:

    Another good Remy video

    Liked by 1 person

    Reply
    • Kevin S. Willis, on June 28, 2017 at 8:55 pm said:

      Just can’t figure out that Brexit thing.

      Like

      Reply
      • ScottC, on June 29, 2017 at 8:09 am said:

        KW:

        Just can’t figure out that Brexit thing.

        To be fair, if the article is correct, this is really the result of a UK court decision, not a European court decision. The European court was involved only in a last ditch attempt to overrule Britain's court decision, something that will not even be possible once Brexit occurs.

        Like

        Reply
        • Kevin S. Willis, on June 29, 2017 at 10:56 am said:

          Ah. I get that. Still, I feel the general gestalt of the pro-EU folks is more in line with the UK court decision. That is, there are plenty example of cultural leftism in the UK that many pro-Brexit voters were voting against with the Brexit vote, not just the onus of being in the EU.

          If nothing else, the European court ruling demonstrates that the EU is kind of worthless as a court of last resort. So, again, why should UK taxpayers be funneling money to Brussels?

          Like

        • ScottC, on June 29, 2017 at 11:09 am said:

          KW:

          Still, I feel the general gestalt of the pro-EU folks is more in line with the UK court decision.

          I very much agree. The Brits who voted against Brexit are far more likley to approve of this decision than those who voted for it.

          Like

    • ScottC, on June 29, 2017 at 8:06 am said:

      Mcwing:

      Wow.

      Coming soon to a single payer system near you.

      Like

      Reply
      • Kevin S. Willis, on June 29, 2017 at 10:58 am said:

        On the one hand, if you are only being treated within the single payer system, that makes sense. You have to control costs, and the best place to control costs are in hopeless cases.

        On the other hand, if the parents were going to take the kid to America for an experimental treatment under their own expense, which I’m thinking they must have been, this isn’t cost management, it’s an ideological decision.

        Like

        Reply
        • ScottC, on June 29, 2017 at 11:12 am said:

          KW:

          On the other hand, if the parents were going to take the kid to America for an experimental treatment under their own expense, which I’m thinking they must have been, this isn’t cost management, it’s an ideological decision.

          I totally agree. But my premise is that single payer systems are, ultimately, driven by ideology rather than cost control, despite whatever rhetoric may accompany arguments for it. So where you have a single payer system, you have a culture/politics in which that kind of appaling judicial decision can and will be made.

          Like

        • Let the mutherfuker burn!, on June 29, 2017 at 11:24 am said:

          I wonder Olof the greater fear is that the treatment is efficacious in some way.

          Like

        • Kevin S. Willis, on June 29, 2017 at 1:19 pm said:

          Seems like that would be tough for a strictly single payer system to manage. A single provider system (and isn’t that kind of what the NHS is?) would be the kind of system where the provider keeps you from refusing a health treatments or leaving to seek other counsel. Ultimately, that’s what the folks on the left generally want: centralized authorities telling individuals how to live their lives for the “good of all”. But if we expanded Medicare to cover everybody, I’m not sure that kind of case would necessarily happen here.

          Although it might. I could see Universal Medicare having a department of lawyers that existed just to make sure all the right people “died with dignity”, but litigating individual decisions in the court though individuals might be pursuing other options under their own financial power. You know, because the scope of the bureaucracy expanded.

          Like

    • Brent Nyitray, on June 29, 2017 at 11:41 am said:

      “If you think everyone is entitled to an opinion, swipe left”

      I have never seen a better summation of the modern SJW left than that….

      Like

      Reply
      • jnc4p, on June 29, 2017 at 12:08 pm said:

        I appreciate the honesty. As I swipe left.

        Just don’t be the male friend she goes drinking with to ask for advice about why she’s still single in eight years.

        There’s another missing line too:

        “If you are going to lie about all of theses things until you get into my pants, swipe right”.

        Liked by 1 person

        Reply
        • Kevin S. Willis, on June 29, 2017 at 1:12 pm said:

          Lots of guys will be: “Sure. Uh-huh. Okay. Whatever.” There are plenty of dudes whose only strong opinion about anything is that they want to get laid.

          Like

        • Let the mutherfuker burn!, on June 29, 2017 at 1:51 pm said:

          I’d set up a “calling out” with my dude bros on my first date w/this broad,have them back down as I call out their misogyny and simultaneously physically intimidate them. She’d be blowing me in the can 10 minutes later.

          Liked by 1 person

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