Morning Report: Home price appreciation continues its torrid pace

Vital Statistics:

  Last Change
S&P futures 4,399 6.2
Oil (WTI) 72.24 0.55
10 year government bond yield   1.27%
30 year fixed rate mortgage   3.02%

Stocks are flattish this morning as we await the FOMC decision at 2:00 pm. Bonds and MBS are down small.


Home price appreciation continues its torrid pace as the Case-Shiller Home Price Index rose 17% YOY in May. Given that May of 2020 was lockdown time, the numbers are probably distorted by small sample sizes, however all indicators point to higher prices. The FHFA House Price Index (which measures only homes with conforming mortgages) rose 18%. The real estate market is simply on fire right now.


Mortgage applications rose 5.7% last week as purchases decreased 2% and refis rose 9%. “The 10-year Treasury yield fell last week, as investors grew concerned about increasing COVID-19 case counts and the downside risks to the current economic recovery,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinance applications jumped, as the 30-year fixed mortgage rate declined to its lowest level since February 2021, and the 15-year rate fell to another record low dating back to 1990.”


Mortgage REIT AGNC Investment recently reported second quarter earnings, which were dinged up by widening mortgage backed securities spreads. Widening spreads means that the difference between the yield on mortgage backed securities and Treasuries is increasing. In practical terms, this means that mortgage rates are not falling as much as the 10 year yield is.

The reason for this is anyone’s guess, but it is probably due to fears that the Fed will start tapering MBS purchases sooner rather than later. The Fed is looking at the increase in housing values and asking the question whether their MBS purchases are exacerbating it.

My guess is that they are not driving the hot housing market (that is supply and demand issue) but the purchases are probably not necessary any more. That said, with fears of another round of COVID, the Fed is probably going to err on the side of caution.


16 Responses

  1. A surprisingly good NYT op-ed:


  2. Good Taibbi piece, especially the bottom line which remains the same:

    “The Vaccine Aristocrats
    Covid-19 cases are rising, but the “Pandemic of the Unvaccinated” blame-game campaign is the worst way to address the problem

    Matt Taibbi

    This is the same political story that’s dominated America since Trump arrived. Why did Americans vote for such a truth-challenged candidate? Because they trusted the political aristocracy less. How did the aristocrats respond to that damning message sent at the ballot box? They doubled the lies and doubled the scolding, increasing the mistrust. Is anyone going to bother trying to break this cycle?”

    From the comments:

    3 hr ago

    I never actually thought I’d say this but I’m beginning to think that, if Trump runs in 2024, I will vote for him. Not because I like him or agree with him or think he’s a wonderful human being, but because it seems to be the only way a deplorable like me can raise my middle finger to these smarmy control freak assholes & their sanctimonious obfuscating bullshit.”

    Trump will benefit in 2024 from not being the incumbent and getting to do what he does best, be the middle finger to the establishment.


    • I think if the CDC imposes another mask mandate, people are going to be a lot less patient than they were last time around.


    • jnc:

      Good Taibbi piece

      It is, but his need to frame the issue as an extension of the same thing that drives his contempt for the finance industry so that he can get in his digs at his traditional, caricatured enemies leads to strained comparisons and detracts from his point.

      I’ve been commenting on the piece at his site.


      • You see my post about his piece on student loans and bankruptcy?


        • I did…I liked that. You were right. He was presenting fringe cases with unique aspects as if they established a precedent for the vast majority of cases, and they don’t.


        • Which I think mirrors some of your criticism of his coverage of the financial industry. Which I now understand better having seen it on something I have direct knowledge of.


      • Saw your comments and liked them.

        Greenwald is pretty much perfectly in alignment with your points that you can’t simultaneously coherently argue that:

        1) The vaccines work
        2) The vaccinated people should continue to do things like wear masks and otherwise act as if they don’t.


  3. At the continuing risk of making this comment section a “greatest hits” of Substack, this is also worth a read:

    “Exploiting Police Emotions for Partisan Gain and Security State Power.

    Glenn Greenwald

    There was, predictably, much melodrama at the first day of the hearings. Not only Capitol Police officers but even members of Congress, such as Rep. Adam Kinzinger (R-IL), wallowed in their enduring trauma and openly wept. Fair enough: the Capitol riot was a genuinely disturbing event. It is lamentable and dangerous any time violence is introduced into political conflicts, and I have no doubt that some of the people present, especially police officers who feared for their lives, were emotionally affected. But generally, the place to resolve those kinds of traumas and emotions is in a therapist’s office, a church or some other place where one finds spirituality, treatment, and connection. What is the broader political purpose of publicly staging these emotive performances, however genuine they might be?

    To ask the question is to answer it. The purpose is to emotionally manipulate the public for partisan gain. Democrats believe that the more they force Americans to hear and care about January 6, the better it is for them.”


  4. Didn’t age well.


  5. Who is falling for the horseshit and why?


  6. Do it, I’m begging you!


  7. Lol


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