Morning Report: Inventory shortages hit existing home sales

Posted on December 23, 2019 by Brent Nyitray

Vital Statistics:

 

Last Change
S&P futures 3233 7.25
Oil (WTI) 60.5 -0.04
10 year government bond yield 1.90%
30 year fixed rate mortgage 3.97%

 

Stocks are higher as we head into what promises to be a dull week. Bonds and MBS are flat.

 

Markets will be closed on Wednesday, and we will have an early close tomorrow. The only economic numbers will be new home sales and that is it. No Fed-speak, etc.

 

Durable Goods orders fell 2% in November, however, Boeing’s issues are probably coming into play here. Ex-defense and aircraft they rose 0.8%. Capital expenditures rose 0.1%.

 

The third and final estimate for Q3 was unchanged at 2.1%. Consumption spending was revised upward to 3.2% and inflation remained in check, rising 1.6% YOY. FWIW, Q4 GDP estimates are coming in at 1.3% – 2.1%.

 

Personal incomes rose 0.5% in November, while personal consumption rose 0.3%. The income number was much higher than the 0.3% expectation, which shows that people are getting wage increases, especially at the lower income levels.

 

Existing home sales fell 1.7% in November, according to NAR.  The median home price rose 5.4% to 271,300 largely do to constrained inventory, which sat at 3.7 months’ worth of sales. First time homebuyers accounted for 32% of sales. “The consensus was that mortgage rates may rise, but only incrementally,” Yun said. “I expect to see home price affordability improvements, too. This year we witnessed housing costs grow faster than income, but the expectation is for prices to settle at a more reasonable level in the coming year in line with average hourly wage growth of 3% on a year-over-year basis.”

 

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