Morning Report: Housing’s contribution to GDP hits a 13 year high.

Vital Statistics:


Last Change
S&P futures 3255 6.6
Oil (WTI) 40.23 0.32
10 year government bond yield 0.55%
30 year fixed rate mortgage 2.98%


Stocks are higher as earnings continue to come in. Bonds and MBS are flat.


Personal incomes fell 1.1% in June while consumer spending rose 5.6%. The inflation numbers are all well below the Fed’s 1% target.


I saw a piece yesterday discussing the jump in the homeownership rate. The 2.9 percentage point increase in the rate was highly unusual (in statistical parlance, an 8 sigma event) which almost certainly points to measurement or data errors. For one thing, we don’t have anywhere near that amount of existing home sales during the quarter to justify that move. While the direction is almost certainly correct, the number looks overstated and probably will be revised downward later.


homeownership rate


Regardless of the homeownership rate measurement issues, demand is so strong that nearly half the home sales last year were never seen in person by the buyer. This is the highest share since 2015, when professional investors were the big buyers, looking to fix and rent single family properties. “Sight-unseen offers will likely continue to climb in the coming months,” said Redfin Chief Economist Daryl Fairweather. “By the end of the 2020 homebuying season, the majority of homebuyers will have made a sight-unseen offer. The pandemic has changed the way many people view homes, and on top of that, the market is highly competitive. If you aren’t using this strategy, another buyer who is could beat you to the punch.”


Housing as a percentage of GDP climbed to a 13 year high, albeit in a pretty unusual GDP print. Housing contributed 16.2% of GDP, as opposed to sub 15% in the prior quarter. Note that we are still way below historical levels. There is incredible pent-up demand.

housing GDP


Some borrowers who went into forbearance are finding themselves hit with unexpected bills when the period ends. Not sure if this is a one-off, but Washington will almost certainly try and make hay with these sorts of situations.

11 Responses

  1. but Washington will almost certainly try and make hay with these sorts of situations.

    One of John McCain’s favorite reforms that never happened was sacrificing the desire for omnibus bills in favor of discrete bills for different situations. Omnibuses always include Xmas tree decorations hidden in the thousands of pages of legislative legalese.

    Of course, that goes hand in hand with a return to Regular Order, which we now have not seen across the board in a long time. The Armed Services Committees and the Ag Committees seem to be aboe to do bipartisan work and report out long before the appropriations are enacted, but what comes through the meat grinder of the “leadership” is thrown into an omnibus and may not look like
    the committee work, after the Xmas decorations.

    NOVA, am I off base here?


  2. No more investigative journalism apparently:

    “Google announces steps to counter spread of hacked materials before election

    The changes will go into effect on Sept. 1.”

    Orwell would be proud:

    “Google will penalize websites that distribute hacked materials and advertisers who take part in coordinated misinformation campaigns, the search and advertising giant announced Friday in an effort to crack down on deception in the months ahead of the November U.S. elections.”

    “Deception” apparently being defined here as true information that’s embarrassing to Democrats. Presumably if the NYT or Washington Post publishes the Pentagon Papers equivalent again, Google will penalize them appropriately.


    • Are any of us surprised?


    • The Left is simply not going to permit another 2016. Duck Duck Go, Bitchute and Parler, your time has come…


    • “Deception” apparently being defined here as true information that’s embarrassing to Democrats.

      In part. But I think more generally it’s being “deception” and “disinformation” is being defined as any information that doesn’t fit their narrative–about anything. The direction of some of these big tech companies has been to move themselves into gate-keeper roles, and not just of political and overtly ideological things, but just . . . everything. What words mean (or don’t). What opinions, even on the left, should be heard. Who should be promoted, who should be removed. What is “science” and what is not. What is “medical” and what is not.

      And to the point where they pronounce on what is truth, based on what they want to be true, and “fact-checking” by starting from the belief something is true or false and then curating whatever evidence is necessary to confirm that.

      Most of it has at least an ideological undertone but at it’s core I’m getting the impression Google and Twitter and so on are moving into shape or censor everything that hoi poloi consumes for their own good–because they can’t be trusted to think on their own. While their is an ideology to elitism versus the peasants–I get the feeling a fundamental driver is a deep-seated feeling in these companies that everything wrong in the world is because of the middle classes, so they need to either be destroyed or brought to heel.


  3. Civil Asset Forfeiture in the news again:

    A worthwhile read.


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