Morning Report: Existing home sales jump

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Stocks are up this morning as earnings continue to come in better than expected. Bonds and MBS are down.

Existing home sales rose 9.4% to a seasonally adjusted annual pace of 6.5 million in August. This is up over 21% from a year ago. The inventory of about 1.5 million units represents a 2.7 month supply, which is a record low. 71% of homes were on the market for less than a month.

“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season,” said Lawrence Yun, NAR’s chief economist. “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”

The median home price rose 14.8% (!) to $311,800. Properties stayed on market 21 days, which is a record low. First time homebuyers accounted for about 31% of sales, which is still well below pre-Great Recession levels of around 40%.

The index for leading economic indicators rose in September, according to the Conference Board. “The US LEI increased in September, driven primarily by declining unemployment claims and rising housing permits. However, the decelerating pace of improvement suggests the US economy could be losing momentum heading into the final quarter of 2020,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The US economy is projected to expand in Q4, but at a substantially slower rate of 1.5 percent (annual rate) according to The Conference Board’s GDP forecast. Furthermore, downside risks to the recovery may be increasing amid rising new cases of COVID-19 and continued labor market weakness.”

The National Multifamily Housing Council reported that 90.6% of all tenants made a full or partial rent payment by October 20. This is an increase from the 90.1% who did the same by September 20. We are still below historical averages however. By October 20, 2019 92.4% of renters had made a full or partial payment. “The importance of the initial support provided to apartment residents by the CARES Act is becoming increasingly clear,” said Doug Bibby, NMHC President. “However, that support has now long since expired and the savings households were able to build are evaporating quickly. NMHC continues to urge lawmakers to come together and pass meaningful assistance to support renters and keep America’s rental housing sector stable.”

Black Knight Financial reported that mortgage delinquencies declined in September for the first time since the pandemic began. The national delinquency rate fell to 6.66% from 6.88% in August. We are seeing the biggest improvement in the early stage delinquencies

25 Responses

  1. “The importance of the initial support provided to apartment residents by the CARES Act is becoming increasingly clear,” said Doug Bibby, NMHC President. “However, that support has now long since expired and the savings households were able to build are evaporating quickly. NMHC continues to urge lawmakers to come together and pass meaningful assistance to support renters and keep America’s rental housing sector stable.”

    McConnell is blocking a package until after the election results are in. There will be relief if
    a] Trump wins and Senate stays R, or b] JB wins and the Senate goes D, but that relief will not happen until February. I am guessing that the gridlock, which I often favor, in this case would lead to little help. So I suspect that NMHC wants either party to sweep if they are reading the same tea leaves as I.

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    • Senate D’s filibustered a relief package on Wednesday. Are we sure it’s McConnell blocking?

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      • Yep.

        I did not mean to be so flippant. There was not much [if anything] in McConnell’s bill that spoke to the renters/landlords issue. Mnuchin and Pelosi have been assuming help for renters + landlords in their discussions.

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    • Unfortunately Americans are needlessly suffering because it’s an election year and so everyone in Congress is paralyzed right now trying to figure out how their vote/non vote helps them retain their little bit of power.

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  2. Yet another US brokered peace deal in the Middle East. If Trump was black and had a D next to his name, he’d win a Nobel Peace Prize.

    https://www.theguardian.com/world/2020/oct/23/sudan-and-israel-agrees-us-brokered-deal-to-normalise-relations

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  3. BTW, our rental house is in Escrow. We ended up getting about $8,000 more than we originally thought it was worth but about $2000 less than we asked. Looks like we’ll owe about $96,000 in taxes, mostly Federal.

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    • Excellent news. Congratulations to you both.

      Our tenants are all paying. We count ourselves fortunate. BTW, CA investors make unsolicited offers for our TX properties, more than in the past, although it was never unusual. Rosanne has an interest in a Westchester County, NY, property but no one makes offers on that one.

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  4. Well this is certainly interesting.

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      • Mark:

        That assumes that a Democratic win will be a Biden Presidency. There’s lots of reason to be skeptical of that assumption.

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        • Just curious, Scott – aside from JB’s age, which is a real concern, what other grounds cause you to be skeptical?

          The WSJ in another analysis suggests that he will pretty much stiff the Left of his party for his key Cabinet posts.

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        • mark:

          aside from JB’s age, which is a real concern, what other grounds cause you to be skeptical?

          His mental acuity. I think he is fading pretty quickly. I am highly skeptical that he is going to be in control of things, even if he does stay alive.

          I also think it is possible that, once in office, if he doesn’t appease the increasingly powerful left wing of the party, it will turn on him, and there is a ready-made and highly believable scandal just waiting for the leftist media to grab a hold of, should it decide it prefers a President Harris to a President Biden.

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        • “a President Harris to a President Biden.”

          There’s no particular reason to assume that the VP will automatically be the power center.

          With Reagan, it was all about Haig, Regan, Baker and Nancy Reagan. George H.W. Bush was not the key figure.

          I want to see who Biden’s Chief of Staff will be. If the same thing had happened to Obama, I would have bet on Rahm Emmanuel over Joe Biden.

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        • That assumes that Biden stays in office. If Biden leaves office then it’s the VP. I’m thinking that Scott’s assertions are for when Biden is no longer holding the office either due to death or resignation.

          It could always go the Woodrow Wilson route.

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        • jnc:

          There’s no particular reason to assume that the VP will automatically be the power center.

          True, unless/until the VP becomes President, which is what I anticipate.

          edit: I haven’t been corked in a long time!

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        • They’ll have to drag him out. After all these years and effort, the last thing he’ll do willingly is resign.

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        • Let’s hope we don’t get a chance to find out.

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  5. https://www.politico.com/news/2020/10/26/employees-leaving-hhs-432115

    this is why I never even considered going back to HHS

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    • Good quote:

      “Those jobs are always hard. Those jobs in a no-win situation are extremely hard. Those jobs in a no-win situation, when there’s sniping and ‘Lord of the Flies’ situations, are impossible”

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