Morning Report: Existing home sales rise

Vital Statistics:

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10 year government bond yield   1.26%
30 year fixed rate mortgage   3.05%

Stocks are higher this morning on overseas strength. Bonds and MBS are flat.


We have a pretty heavy week of data coming up, with new home sales, GDP, and personal incomes / outlays. The annual Fed Jackson Hole conference is this week as well. Jerome Powell speaks on Friday.


The Chicago Fed National Activity Index showed the economy expanding well above historical trends in July. The CFNAI is a sort of meta-index of a bunch of disparate economic indicators.


Private label securitizations hit $42 billion in the second quarter, which was about the highest number since the 2008 financial crisis. This was driven by Fannie and Freddie’s limits on investment properties and second homes. Non-QM was a part of this as well, but the growth is coming from NOO properties that F&F won’t insure. This was the whole point of Mick Mulvaney’s caps on F&F, and it looks like it worked.


Existing home sales rose 2% in July to a seasonally-adjusted annual rate of 6 million properties, according to NAR. “We see inventory beginning to tick up, which will lessen the intensity of multiple offers,” said Lawrence Yun, NAR’s chief economist. “Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available.”

Inventory increased 7.3% to 1.7 million properties, which represents a 2.6 month supply. The median home price rose 18% to 359k. “Although we shouldn’t expect to see home prices drop in the coming months, there is a chance that they will level off as inventory continues to gradually improve,” said Yun.

The first time homebuyer accounted for 30% of all sales, and 23% of transactions were all-cash sales.

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