Morning Report: Home Prices rise

Posted on December 23, 2020 by Brent Nyitray

Vital Statistics:

 

  Last Change
S&P futures 3691 15.3
Oil (WTI) 47.41 0.24
10 year government bond yield   0.95%
30 year fixed rate mortgage   2.78%

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

 

President Trump has indicated dissatisfaction with the stimulus bill passed by Congress. He wants higher payments and much of the extraneous stuff pulled out. He didn’t expressly say whether he would veto the bill as-is. There are all sorts of things in there that have nothing to do with stimulus (new penalties for illegal streaming, funds to Pakistan for gender studies, etc), and my guess is that stuff is going to have to go.

 

Mortgage applications increased by 1% last week as purchases fell 5% and refis rose 4%. “The 30-year fixed rate – at 2.86 percent – is a full percentage point below a year ago,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Last week’s increase in refinance applications was driven by FHA and VA activity, while conventional refinances saw a slight decline. Overall refinance activity was 124 percent higher than in 2019, as borrowers continue to seek lower monthly payments or different loan terms.” Despite the drop in purchases they are still up 26% on a YOY basis.

 

Personal incomes fell 1.1% in November, and personal spending fell 0.4%. Inflation as measured by the personal consumption index came in at 0% on a MOM basis and 1.1% on a YOY basis. Inflation is way below where the Fed wants to see it, and unless we see a dramatic shift in these numbers, the Fed will keep the pedal to the metal with asset purchases and 0% interest rates.

 

Home Prices rose 1.5% MOM and 10.2% YOY according to the FHFA House Price Index. “U.S. house prices rose for the fifth straight month since states re-opened their local economies,” said Dr. Lynn Fisher, FHFA’s Deputy Director of the Division of Research and Statistics. “The 12-month gain of 10.2 percent in October is the highest annual appreciation observed since the 2004-2005 period. Extremely low mortgage rates and a limited supply of homes for sale continue to propel price gains. The data do not yet reflect renewals of some local and state COVID-19 restrictions.”

 

New Home Sales fell 11% MOM to 841,000. This is still up 21% on a YOY basis. The median sales price of new houses sold in November 2020 was $335,300. The average sales price was $390,100. I suspect that new home sales will be the big surprise of 2021.

 

In other economic news, durable goods rose 0.9%, while initial jobless claims fell to 800k last week. Consumer sentiment fell.

Filed under: Economy, Morning Report |

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66 Responses

  1. lmsinca, on December 23, 2020 at 9:24 am said:

    Donald Trump……………..the gift that keeps on giving…………..

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  2. novahockey, on December 23, 2020 at 9:45 am said:

    well, i got a few provisions tucked into the bill.

    hope you all are doing well.
    enjoy the holidays!

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  3. markinaustin, on December 23, 2020 at 10:00 am said:

    BMI and corrupt government? Copied right:

    Weighty matters: overweight politicians [The Economist]

    In the southern English town of High Wycombe, the MP, mayor and councillors are publicly weighed every year, to deter them from “gaining weight at taxpayers’ expense”. The centuries-old tradition is conducted largely in jest, but the townsfolk may be on to something. A recent study of 15 post-Soviet states used an algorithm to analyse photographs of almost 300 cabinet ministers and estimate their body-mass index, a gauge of obesity. The author found that the median BMI of a country’s cabinet is highly correlated with its level of corruption, based on indices by the World Bank and Transparency International. The Baltic states and Georgia were the least corrupt and boasted the slimmest cabinets. Turkmenistan and Uzbekistan, among the worst for corruption, had the chubbiest. Obese politicians aren’t necessarily more dishonest than slimmer ones. But they would be wise to slim down: studies show voters are less likely to plump for candidates who are, well, plump.

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  4. markinaustin, on December 24, 2020 at 9:58 am said:

    A non-political pardon by DJT – no sarcasm here – I can save that for the political pardons of deep swamp Congresscritters.

    https://reason.com/volokh/2020/12/23/president-trump-pardons-rickey-kanter-last-year-judge-barrett-ruled-that-kanter-did-not-lose-his-second-amendment-rights/

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  5. Michigoose, on December 25, 2020 at 7:05 am said:

    A Merry Christmas (and a belated Happy Hanukkah) to all, and good wishes to you and yours!

    Liked by 1 person

    Reply
    • ScottC, on December 25, 2020 at 4:23 pm said:

      Thanks jnc…looks like they will need a test to return. Might be a challenge getting the timing right, given all the holidays and weekends between now and when they are supposed to leave.

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  8. lmsinca, on December 27, 2020 at 9:07 am said:

    McWing

    Need more enforcement. Make these ungrateful citizens pay!

    CA is a shit show right now and no one knows what we’re doing wrong, but your comment isn’t really that helpful. We have 0% ICU beds/staff available and they’re beginning to open up field hospitals and searching around the world for staff. I have one very good friend (my age) who just came home from the hospital yesterday with an oxygen tank after being in there for a week . Her husband, my husband’s best friend, was also sick but managed to stay home. He thinks they released her too soon but I guess we’ll never know.

    Our neighbors across the street both had it and an ambulance came and took him to the ER one morning because he was so sick and his wife was too sick to drive him. Luckily they both survived but she seems to have some lingering lung issues…..they’re 50.

    My daughter in CO lost a very dear co-worker last week and he was only 24. They were trying to figure out a way to get him a lung transplant after being on a ventilator for 10 days but he didn’t make it that far. I have a friend in ID who was in the hospital on a ventilator and is now home, thank God, but also with lingering lung issues and maybe heart too……….she’s undergoing tests for that.

    The Riverside and Orange County sheriff’s here have clearly stated that they will not enforce the restrictions and so many restaurants remain open and people openly defy the orders in both of these counties. Walter and I are trying our hardest to stay healthy and really only go to Dr appointments and a once a week shopping trip for groceries. Most of my neighbors aren’t doing the same. I think the fact that Covid has become as much a political issue as a health issue has caused the US to do a much worse job controlling the pandemic than we otherwise would have done. Just my opinion though.

    Our governor clearly lost his credibility by going to dinner with friends and traveling to and from his ranch in another state.

    I’m trying to stay healthy so I can see my kids and grandkids again. Last night my granddaughter called to tell me she’s sick (hopefully just a cold) and was exposed to Covid in the jail in Cheyenne, WY where she works as a Sheriff now. She was with our son, DIL and grandson celebrating Christmas together last Tues and Wed because she had to work Xmas and Xmas Eve. Now the entire family is being tested of course. Hoping she’s okay and tests negative as do the rest of them.

    I’ve been tested 3 times so far and Walter twice. Once before my hip replacement and twice for being exposed at PT.

    Anywhooooo, that’s the state of Covid in my life. It sounds like the rest of you are doing better so count yourselves lucky.

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    • jnc4p, on December 27, 2020 at 10:16 am said:

      Have you heard anything about when you will be getting the vaccine? One of my coworkers already has been vaccinated just based on age and preexisting conditions.

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      • lmsinca, on December 27, 2020 at 10:46 am said:

        No word here yet Jnc. We assume in 2 or 3 months though. Walter may go before me because of his fragile health. Age wise they’re starting with 75 and up as far as I know and at 70 and 72 we’re not there yet. Our insurance company will inform us when we’re eligible. I can hardly wait. My CO daughter is due at the end of January and I’m dying to get to CO to help her and meet the new little bundle of joy. It’s bad here in Norco where I live.

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    • lmsinca, on December 27, 2020 at 1:55 pm said:

      I just got word that our granddaughter tested positive this morning so we assume the other 3 will as well. She has a fever, a slight cough and a headache as well as being very lethargic. Not happy she’s alone. Keep us in your thoughts.

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    • Let the mutherfuker burn!, on December 27, 2020 at 5:26 pm said:

      What evidence is there that draconian lockdowns help? Also, is there any major figure that advocates for these moronic lockdowns that has not violated them?

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      • lmsinca, on December 27, 2020 at 6:03 pm said:

        You know what McWing, at this point I really don’t care anymore. All I can do is protect myself and Walter and pray for my family. We’re fortunate that we’re able to stay home for the most part. I think the best thing would have been for everyone to wear masks but apparently that isn’t even good enough now because the community spread is so far and wide. I think people/politicians/health care professionals are all grappling with the best way to curb the spread but until people take it seriously it’s kind of a moot point. The “draconian lockdowns” may have worked in April and May here in CA but people gave up and now we’re paying the price here. How would we know if they would work now if people aren’t actually doing it?

        I mentioned before that my daughter told me in March when we cancelled our Easter travel plans for April, that we were all going to get it. I suppose that’s what some people are hoping for, but not me……………..and certainly not her. She said that as a warning to myself and her dad.

        I have no clue what the rich and famous are doing to be honest and once again I really don’t care………………..

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        • markinaustin, on December 27, 2020 at 8:39 pm said:

          We are in your boat, LMS. Rosanne and I are supposed to get our first shots next week. I hope your granddaughter gets through with no long term issues, and your whole family will be in our thoughts.

          We are still visiting grandkids in Austin outdoors and masked. I shoot baskets with the 12 YO twins but I use my own ball and they use theirs.
          We stroll the baby in his carriage and he has never seen our faces.

          My six year old grandson recognized me masked the other day [big grin and call out] and I was gratified as he did not know I was coming. His three year old brother was not as quick.

          In a few months – maybe just 45 days – my baby grandson will see my face for the first time. BTW, I have held him in my arms wearing an N95 and goggles. He did not scream in terror.

          Two weeks after Memorial Day our hospitals were hitting 70 COVID intakes a day and we went to stage 5. Now we have gone to stage 5 with only 50 new COVID intakes because we farmed out so much nursing help to the Valley and El Paso. So it would be tough to have to go the hospital for anything at all, right now.

          Like

        • ScottC, on December 28, 2020 at 3:13 am said:

          lms:

          How would we know if they would work now if people aren’t actually doing it?

          I think maybe you should consider the possibility that it isn’t anyone’s fault, and that spread can only be held off for so long until COVID does what contagious diseases do….spread. It is interesting to observe that a lot of the places that everyone was talking about in the spring as “doing it right”, places like California and Germany, are now suffering big spikes.

          I also think it is unrealistic to think that the social nature of human beings can be suppressed by politicians, and that any effort to try will likely be more damaging than beneficial.

          And to provide some perspective to all of the downer anecdotes….my daughter tested positive a couple months ago. She had a weekend of sniffles and is otherwise perfectly fine. Two nephews also tested positive, similar story. I have an aunt and uncle in their 70s, both got it, both doing fine, no hospitalisation. He, BTW, has a bad heart and had heart surgery a couple years ago. It remains the case that the vast majority of people, even elderly, who catch COVID do not die from it.

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  9. jnc4p, on December 27, 2020 at 2:35 pm said:

    The cultural revolution marches on:

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  10. Brent Nyitray, on December 27, 2020 at 2:37 pm said:

    Retail stock investors are pushing margin debt to records.

    “Before, I wasn’t doing particularly well financially, Now, I’m well beyond where I wanted to be for retirement,” said Mr. Burnworth, who added that he also sold his own home and used some of the proceeds to buy more Tesla options.

    https://www.wsj.com/articles/investors-double-down-on-stocks-pushing-margin-debt-to-record-11609077600?mod=hp_lead_pos5

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  11. ScottC, on December 28, 2020 at 6:35 am said:

    Worth having a look at this video.

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  12. lmsinca, on December 29, 2020 at 9:34 am said:

    Scott

    And to provide some perspective to all of the downer anecdotes….my daughter tested positive a couple months ago. She had a weekend of sniffles and is otherwise perfectly fine. Two nephews also tested positive, similar story. I have an aunt and uncle in their 70s, both got it, both doing fine, no hospitalisation. He, BTW, has a bad heart and had heart surgery a couple years ago. It remains the case that the vast majority of people, even elderly, who catch COVID do not die from it.

    I’m happy your family and friends have fared so well. Unfortunately that doesn’t seem be the case in my anecdotal stories. Hope everyone continues to do well.

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