Morning Report: Home prices rise 15% in April

Vital Statistics:

S&P futures4,2313.8
Oil (WTI)69.43-0.17
10 year government bond yield 1.57%
30 year fixed rate mortgage 3.17%

Stocks are flattish this morning on no real news. Bonds and MBS are up.

The upcoming week will be relatively data-light, however we will get some inflation data with the consumer price index. Year-over-year comparisons will be noisy given the lockdown of a year ago.

Home prices rose 14.8% in April, according to Black Knight Financial Services. There is just two months of inventory available for sale, which is the lowest since Black Knight started keeping records. Higher prices are driving down affordability, and the company estimates that it costs 20.5% of median income to make monthly payments on the median home price. This is high compare to the past decade, but below the historical average of 23.6%. The number of listings in April was down 60% compared to the 2017-2019 average. Note that Redfin says that asking prices are beginning to fall.

Lumber was limit down on Friday, as supply is finally catching up with demand.

The Fed is thinking about talking about considering the concept of reducing bond purchases, according to the Wall Street Journal. It wants to avoid the “taper tantrum” of 2013. “We’re going to have discussions about our stance of policy overall, including our asset-purchase programs, and including our interest rates,” Cleveland Fed President Loretta Mester said Friday on CNBC shortly after the Labor Department released what she described as “a solid employment report.” Note the Fed is planning on selling its holdings of corporate bonds and ETFs which it purchased last year to stabilize the credit markets.

June might be the pivot point for the economy’s second-half acceleration. Baseball stadiums will be back to full capacity, and the rest of California’s draconian COVID restrictions will end on June 15. The expanded COVID-19 unemployment benefits will lapse in September, which should be a catalyst for people to get back to work.

20 Responses

  1. Kinda wild.

    I’m sure it’s Trump’s fault though.


  2. Brent & Scott – Your big chance

    “Editor’s Note: Contributors Wanted
    TK News is expanding, so we’re looking for new material, but of a particular kind.

    Matt Taibbi

    Encouraged by the response to videographer Ford Fischer’s new series, “Activism Uncensored,” I’m putting out a general APB for new contributors. However, because I’m trying to stick to a specific theme with outside contributions, please read the following description before replying.

    I would like this site to be a place where subscribers can get reporting and analysis they can’t get from mainstream commercial press sources. Therefore, I’d be especially interested in someone who has experience in a certain field and is frustrated by how their sphere is covered. It could be any area: medicine, law, policing, education, real estate, lobbying, finance, lion-taming, dentistry, whatever.”


    • I suspect he has zero interest of hearing from anyone in the industry that says we aren’t all crooks.


      • Maybe, maybe not. I think his main thing is your take has to be informed. Greenwald specifically seeks out contributors who disagree with him.


      • I’m not sure that’s true. I think Matt has his biases but in many ways has internalized the Gell-Mann amnesia effect lesson. He talks about banking from what he understands, and mortgages, which is the level of a semi-informed layperson and I totally get his takes because I don’t know enough to know where and how wrong he is, personally.

        I think explanations of how it works and where real incentives are that aren’t defenses, just: this is how the parts actually move in the machine . . . I think he’d be receptive to that.


  3. Every time the Democrats bring up “infrastructure” Republicans should ask about this:

    “California bullet train project will seek $4.1 billion as costs grow”

    “High-speed rail to run on a single track in Central Valley as overall cost rises”


    • I have never understood the left’s obsession with choo choo trains


      • Trains are great. Subways are great. There are a lot of pluses to trains. I’d love a world of trains much like the lefties and also apolitical pork-gatherers envision.

        But to make economic sense they need to cost about 10% to 25% as much as they do to get done and at least 50% what the cost now to operate. Or most American cities and states should have built around trains when trains were cool and few people had cars, and then preserved. And costs managed.

        And passenger trains should have be turned it subways, basically, in the cities. A stop in every neighborhood they go through until they are out of town.

        And so on. But it’s like anything. Trains are old! It’s all cars and plains! Scrap the trains, pull up the tracks, yada yada. WAIT! Now trains are cool again, let’s put down new tracks and the cost of hundreds of billions!

        For years, Memphis had a trolley. Spent millions scrapping the trolleys and pulling up the tracks. Then a new admin said: Memphis needs a trolley! So we spent millions putting in a new trolley. Everytime I see it, it’s empty, and always has been. Maybe one or two people on it. In no small part because the main route of the Trolley spends most of its time driving through areas of Memphis that look like a 3rd world country recently ravaged by war.


      • It’s also the whole collectivism vs individualism thing plus now trains are considered “green”.


    • Also . . . rail doesn’t have to be high-speed. Slower is cheaper and safer.

      Roomy seats and fast wi-fi. All they need. Most people would be find with a comfortable 2 hour train ride or whatever, if they could believably pretend they were working the entire time.


      • HSR could work between Boston and NY.

        Though getting the permits from Westchester County and Fairfield County alone will take at least a century.


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