Morning Report: Existing Home Sales rise

Vital Statistics:


Last Change
S&P futures 2955 4.5
Oil (WTI) 57.79 0.24
10 year government bond yield 2.03%
30 year fixed rate mortgage 4.01%


Stocks are higher this morning on no real news. Bonds and MBS are flat.


Business sentiment in Germany hit a 5 year low, which is pushing Bund yields lower. The US Treasury market is being pulled by overseas weakness, but many are trying to interpret the US yield curve’s flattening as a recessionary indicator. Don’t buy it. Rates will probably meander lower unless we get indications of persistent 2%+ inflation. Separately, Trump tweeted that the Fed doesn’t know what it is doing, though he denied considering demoting Jerome Powell.


We have a lot of housing data this week, with the Case-Shiller and the FHFA Home Price indices. We will also get new home sales. The only potential market mover is personal income / personal spending on Friday. The third revision of first quarter GDP will be released on Thursday.


Existing home sales rose 2.5% in May, according to NAR. Total Sales came in at 5.34 million, a drop of 1% on a YOY basis. The median home price rose to $277,700 from $265,100 a year ago. Falling mortgage rates are helping home sales as the 30 year fixed rate mortgage flirts with the 4% level again. Inventory is still tight however, at only a 4.3 month supply.


Economic activity picked up in May, according to the Chicago Fed National Activity Index. Production-related indicators led the increase, which jumped from -.48 to -.05. This means the economy is more or less growing on trend after a weak April. The CFNAI is a meta-index of 85 economic indicators, so it really is a lagging index. It isn’t a market-mover.


Signs of life in the private label securitization market? Cerberus (a large private equity firm) did the first post-crisis HELOC securitization last week. HELOC securitization was only done during the bubble years, and many of these loans turned sour in the housing bust. Cerberus only issued the most senior AAA tranche, and it priced at L+105, a bit worse than the initial price talk. Cerberus did not sell any of the junior pieces.


Ginnie Mae has let Loan Depot out of the penalty box. Ginnie Mae has been focused on prepayment speeds for VA loans, which is an indication that a lender is churning VA loans through the IRRRL process. “The removal of such a restriction is based on the Issuer having demonstrated to Ginnie Mae’s satisfaction that (a) its prepayment speeds are substantially in-line with those of equivalent multi-Issuer cohorts, and (b) such improved performance is sustainable,” the agency said in a statement.


Freddie Mac is rolling out a new rehab loan: the CHOICERenovation loan. It will allow the buyers to roll the renovation costs into the loan, permit them to begin renovations after they move in, and the homeowner can act as his own contractor. “There’s a fair amount of housing with deferred maintenance,” Danny Gardner [Senior VP of single-family affordable lending at Freddie Mac] said in an interview. Cash-strapped buyers “should be very willing to undertake those issues if they can get houses at an affordable price.” The program is not available quite yet, but it should be out sometime this summer.


Contrary to expectations, professional investors are still buying starter homes and renting them out. Investors purchased 20% of the houses in the bottom third of the national price range in 2018, which is 5% more than the historical average. Many expected the REO-to-Rental trade to fizzle out as investors would ring the register. So far, that hasn’t happened, as home construction remains firmly mired in recessionary territory.

18 Responses

  1. Brent, for what it’s worth I believe E. Jean Carroll’s story.

    I don’t know how the CNN interview went, but the write up was pretty straightforward.

    Liked by 1 person

    • i didn’t really watch… was just listening in the background. but most of it seemed to be boilerplate rhetoric.

      i find it hard to believe you could rape someone in a bergdorf goodman dressing room. the place is packed. if you fart in one, 100 people are going to know it.

      fwiw, my wife wasn’t buying it either.


      • She notes in the piece that she basically kicked him off of her and ran out and the whole thing lasted less than three minutes. I find it credible due to the consistency with Trump’s other alleged assaults and her admissions that she thought Trump was handsome and charming and was going along with it until it turned violent. It aligns with Trump’s view that “they let you do it” when it comes to him and his celebrity. I’m pretty sure Trump saw the encounter as consensual.

        I think she would be on firmer ground if she said that there is a culture of sexual harassment and violence (especially during the Mad Men Baby Boomer generation in which she came up) rather than adopting the broadest possible definition of violence and lumping in everything under that description.

        And of course other interested parties have the incentive to take what she actually wrote and said and exaggerate it even further, even though it’s already bad enough (see Kavanaugh).

        Also, here’s why the CDC’s numbers are BS:


        • More than 1 in 3 women and 1 in 4 men have experienced rape, physical violence and/or stalking

          One of these things is not like the other.

          Unwanted text messages become harassment. And then that goes into the numbers. Then self-reported “harassment by facial expression or body posture” can become harassment/violence and that gets added to the numbers . . .

          Stalking can be a real problem but it’s a number that needs to be broken out from rape/violence–and rape is squishy enough now that consensual sex that one partner later regrets can now be redefined as rape.

          Eh. The Victorians had it right. Clothing everywhere and chaperones and no sex until your married and probably not even then.

          Liked by 1 person

        • Well, if you can’t have sex till you’re married and then that dries up after the first kid, can we allow for mistresses or at least a decent cathouse?

          Liked by 2 people

        • We do allow for mistresses. At least affairs are not criminalized [in most states, today, although I suspect Louisiana still burns witches at the guillotine or something]. What happens under family law is up to the family.

          It is the other point you make that bears serious consideration. Why prostitution is not treated as lawful regulated commerce with health inspections at least at the level of USDA approval of beef is beyond me.

          I knew a guy who lost his wife about fourteen years ago. In their sixties,they had a healthy sex life until her last six months with the cancer, and then he truly grieved for almost a year. After the year, he still had no desire to get into a long term relationship again – figured he had been lucky once, and also didn’t want anyone competing with his time with his adult children – but he did want to first find out if his thingie still worked and second relieve the pressure occasionally. So in our men’s group we suggested a prostitute. It was a good solution to both questions for him. And then he died, too, but not from being with a chippie.

          Liked by 1 person

        • Other survey questions were equally ambiguous. Participants were asked if they had ever had sex because someone pressured them by “telling you lies, making promises about the future they knew were untrue?” All affirmative answers were counted as “sexual violence.”

          Jeeze. I mean, those dudes are scummy but still . . . how many dudes end up married cuz a woman made promises that turned out to be untrue? 😉

          How many people have taken jobs or hired people based on things that turned out to be untrue?

          Liked by 1 person

        • “I’m pregnant.”

          Couple gets married.

          “I had a miscarriage.”

          Liked by 1 person

    • no matter what problems are driving women crazy — their careers, wardrobes, love affairs, children, orgasms, finances — there comes a line in almost every letter when the cause of the correspondent’s quagmire is revealed. And that cause is men.

      The reverses is true, as well. And sometimes the perpendicular: if a woman’s problem isn’t a man, it’s going to be a woman, or themselves. After that, you’re left only with acts of nature.

      Such statements are like: “I have identified the group responsible for all our woes: the horrible men!” But, by definition, men are going to be responsible for half your problems, at least, be you woman or woman. In relationships, if you are a woman attracted to men, men are going to be 100% of the problem (unless you want to blame yourself, which most people don’t).

      There are plenty of men who could say all their problems are caused be women. And it would also be true. Statistically, it’s inevitable. It’s not a revelation.

      Every woman, whether consciously or not, has a catalogue of the hideous men she’s known.

      And, if they are being honest, hideous women. Hell is other people. There are lots of awful human beings. And if you know and have been hurt by a lot of hideous people, especially as an adult, then the problem is mostly you and your boundaries and your ability to enforce them.

      That being said, she remembers every detail about that first hideous boy, and makes a big deal about not remembering his name, because who can remember when you’re just so boy crazy?

      I believe the story, but I don’t believe she doesn’t remember who that guy is.

      We do not cast ourselves as victims because we do not see ourselves as victims

      Yeah, I don’t think that’s universally true.

      As far as the Trump story . . . eh, lots of believable details. Sounds credible, although she could have easily swapped out some other cad at some other time and place for Trump in that exchange. Who knows.

      The overall thrust of “men are the problem” seems . . . limited. There’s a reason that “hell is other people”, and not just one gender or the other.


      • I would add as well that much of the pressure women feel comes from competing with other women and the fear of how other women will judge them.

        Not pressure from guys.


        • Indeed. I’ve never known a woman who hasn’t has as much or more trouble with women–and certainly more consistently.

          It’s awful that that guy attacked her that time, and maybe that other time and this other time, and then there was that sexist boss, and that other sexist boss . . . and then the remaining complaints, the daily complaints, the constant complaints . . . those are about the women they work with and women in their social group, and then probably their relatives and in-laws.

          Which is because most of our problems in life come on two legs and talk back.

          Or: for every hideous man there is an equally hideous woman. Possibly two. That’s like Newton’s 3rd law.


        • Also, as an aside, I wonder how much of this kind of stuff we’re going to start seeing as the 2020 election ramps up. Just, you know, coincidentally.


      • Pretty sure she was 52 at the time. Trump doesn’t seem like the Cougar chaser to me.

        Liked by 1 person

        • Yeah. I mean it’s possible and I wasn’t there and I don’t know. But such stories do have to be taken with a grain of salt. And it seems like she was an attractive 52.

          But, yeah, when the story is about the president, after he became president, right before the next campaign season … I dunno. Misremembering, intentional misinformation, conflating multiple events … all seem possible. I’m more curious about the person whose name she supposedly can’t remember is, and what important or famous liberal it turned out he is now.


      • “The reverses is true, as well.”

        There’s a bigger issue. The sample is already self selected based on who writes into advice columns in the first place.

        The women who are happy and like the men in their lives aren’t the ones doing that.

        Carroll did have enough self awareness to ask at one point in the article “Do I attract hideous men? Possibly.”

        But she didn’t take it to the logical conclusion and ask exactly what sort of people inhabit the NY celebrity scene that she hangs with. I’d suggest that narcissism runs high there.

        Liked by 2 people

    • RedState is suspicious of the story.

      Eh, it is a little offbeat. Also, she won’t produce corroborating friends she says are definitely there (not that such can’t be produced, true or false).


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