Morning Report: New Home Sales rise 32% YOY

Vital Statistics:

  Last Change
S&P futures 3425 -28.6
Oil (WTI) 38.95 -0.29
10 year government bond yield   0.81%
30 year fixed rate mortgage   2.90%

Stocks are lower this morning as COVID-19 cases continue to rise and the window to pass a stimulus bill closes. Bonds and MBS are up.

New Home Sales fell 3.5% month over month in September to a seasonally-adjusted annual rate of 959,000. This is up 32% on a YOY basis. Inventory remains tight at 284,000 homes, or a 3 month supply.

The upcoming week will have a slew of important economic data, including GDP, personal income / spending, and house prices.

Guild mortgage went public at $15 a share. It also settled a FHA lawsuit from back in the day when the HUD sued everyone under the False Claims Act. While the mortgage bankers are making huge amounts of money, multiples are disappointing. IMO, the Street is underestimating how much money will be made when 75% of the $16 trillion mortgage market is refinanceable.

Mortgage rates are at the lowest on record. This goes back to the early 70s when the surveys started. Chances are these are the lowest mortgage rates ever, going back to the New Deal when the 30 year fixed rate mortgage was first created.

The typical homeowner made $85,000 on their home sale, according to ATTOM Data Solutions.

“Home prices and seller profits across the nation continue racking up new highs as the housing market remains relatively immune from the economic havoc caused by the Coronavirus pandemic. It’s almost as if the housing market and the overall economy are operating in different worlds,” said Todd Teta, chief product officer at ATTOM Data Solutions. “Things remain in flux, given the significant uncertainty about when the pandemic might recede or what impact the recent resurgence could have in different areas of the country. But with mortgage rates at rock-bottom levels and declining supplies of homes for sale, conditions remain in place for continued strong prices and returns.”

34 Responses

  1. “Home prices and seller profits across the nation continue racking up new highs…
    My oldest daughter, a realtor in Santa Fe, says she is getting multiple offers over list for anything that comes on the market, in days.

    She tentatively calls it “Escape from California”, but worries that local first timers will soon be priced out of the market at what used to be entry level.

    Like

  2. I think this is a good analogy:

    Company towns, especially the sort Travis sang about, are mostly a thing of the past in this country, and not all were as exploitative as the one in “Sixteen Tons.” By the standards of the time, some were even good, if paternalistic, places for workers to live. The defining feature was not abuse and exploitation, but control. Economic power merged with cultural and political power to control workers.

    Big Tech is turning America into a giant company town. The parts of the internet everyone uses are controlled by a small number of companies. In an information economy and online culture, that ubiquity gives them dominion, and they are using it.

    https://thefederalist.com/2020/10/26/big-tech-is-turning-the-united-states-into-a-giant-company-town/

    Like

  3. Has ACB been confirmed yet?

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  4. I’m not sure if any of you will be interested in this but I think the best case scenario right now to keep things open, at least partially, is people wearing masks.

    Take Kansas, where a real-world experiment in face coverings emerged this summer. In early July, Gov. Laura Kelly, a Democrat, issued a statewide mask order, but was forced to let counties opt out of it under a law limiting her emergency management powers.

    Only 20 of the state’s 105 counties enforced the order, which required residents to wear masks in public. Those 20 counties saw half as many new coronavirus infections as the counties that did not have the mandate in place, according to a new study from the University of Kansas.

    Cellphone-tracking data from the University of Maryland showed no differences in how often people left home in the counties with or without mask mandates, so it seemed likely that the masks made the difference.

    Experts say it’s part of a countrywide trend: Localities that impose mask mandates often see fewer cases, fewer hospitalizations, fewer deaths and lower test-positivity rates than nearby localities that do not.

    Other studies have turned up similar results in Alabama, Oklahoma, South Carolina and Texas. A recently published report from the Centers for Disease Control and Prevention found a 75 percent drop in coronavirus cases in Arizona less than a month after mask-wearing became enforced and bars and gyms were shuttered.

    https://mediahub.ku.edu/media/Masks/1_49bb9aid?campaign_id=154&emc=edit_cb_20201026&instance_id=23509&nl=coronavirus-briefing&regi_id=111507526&segment_id=42355&te=1&user_id=a3fcbe9bf7fd03bfbef30ff4dbbfc853

    https://www.cdc.gov/mmwr/volumes/69/wr/mm6940e3.htm?campaign_id=154&emc=edit_cb_20201026&instance_id=23509&nl=coronavirus-briefing&regi_id=111507526&segment_id=42355&te=1&user_id=a3fcbe9bf7fd03bfbef30ff4dbbfc853

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  5. Good news is that trial Judge has laid out why the Justice Department cannot defend POTUS against a claim of defamation for calling a woman a liar about an allegation occurring in his pre-Presidential private life. Two step analysis: is POTUS a federal employee under the Tort Claims Act? Judge says “No”, but I think “Yes”. Although there is room for argument about it under that statute. Second: is claim against POTUS based on his official conduct? Judge says “No”. I say “No” as well.

    As to why I disagree with the Judge on his first answer? Well, I can make up a case I think comes within the Tort Claims Act. Suppose Secret Service agent driving POTUS has a heart attack and POTUS takes the wheel of the limo and runs over someone, while racing to hospital. I think TC Act would apply.

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    • “Second: is claim against POTUS based on his official conduct?”

      Note that the conduct in question isn’t the alleged rape, but rather answering the question about it in the interview.

      Good write up from PopeHat from when the case first came up:

      https://popehat.substack.com/p/trump-the-carroll-case-and-the-problem

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      • …answering the question about it in the interview.

        Yes, obviously. But the President’s alleged defamatory statement was not within the scope of his employment, or the conduct of his official duties, as POTUS.

        I agree that is [almost] crystal clear. Almost, because the argument that “answering a question” is a public obligation and different from, say, a gratuitous tweet.

        I don’t agree that the President is not an employee under the Tort Claims Act for acts within his official duties.

        You may note that the case is staying in Federal Court. That should help Trump defend, in and of itself. I don’t think the Plaintiff’s case is worth much aside from publicity, even if all her complaints are true and correct.

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        • “Almost, because the argument that “answering a question” is a public obligation and different from, say, a gratuitous tweet.”

          I don’t think it can be distinguished from official conduct for purposes of a defamation suit when he’s sitting for an interview as President with the press and gets asked the question directly.

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        • The distinction is obviously that he was being asked about an alleged event that occurred years before he was POTUS. He has no obligation to answer that question at all. Is he acting as an agent of the USA in making that response to a pre-presidential personal allegation? Obviously our views differ on that. Let us take a kinder to the plaintiff set-up. Suppose the intern had sued Clinton for defamation for essentially calling her a liar. What would be your view on that case? My hard assed view is that nothing in that case had to do with his official duties, so he would have been on his own.

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        • I agree with PopeHat that as the law stands now, it’s probably covered.

          Of course, that’s my non-lawyer opinion.

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  6. Fascinating data on COVID, visualized:

    https://informationisbeautiful.net/visualizations/covid-19-coronavirus-infographic-datapack/

    Lots of interesting ways to look at. While more responsible for deaths than any other infectious disease it’s less than hepatitis B and pneumonia together, which kill more people everyday together. As many people die per 1.7 days of AIDS as per day of COVID. Lots of other things that make one wonder about our response in comparison to other comparable risks.

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  7. Twitter suspends CP Commisioner Mark Morgan for reporting on progress of border wall:

    Something needs to be done about Twitter.

    Like

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