Morning Report: Home prices up; confidence down

Vital Statistics:

 LastChange
S&P futures3,92824.75
Oil (WTI)110.61-0.14
10 year government bond yield 3.22%
30 year fixed rate mortgage 5.90%

Stocks are higher this morning as China eases lockdown restrictions. Bonds and MBS are down.

House prices rose 1.6% MOM and 18.8% YOY according to the FHFA House Price Index. “House price appreciation continues to remain elevated in April,” said Will Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “The inventory of homes on the market remains low, which has continued to keep upward pressure on sales prices. Increasing mortgage rates have yet to offset demand enough to deter the strong price gains happening across the country.”

Separately the Case-Shiller Home Price Index rose 1.8% MOM and 21.2% YOY. These appreciation numbers go back to April, so this is before the Fed really started pushing up rates. That said, I think the supply and demand situation is not really conducive to any sort of meaningful / widespread home price depreciation.

Consumer confidence fell again in June, according to the Conference Board. “Consumer confidence fell for a second consecutive month in June,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “While the Present Situation Index was relatively unchanged, the Expectations Index continued its recent downward trajectory—falling to its lowest point in nearly a decade. Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices. Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by yearend.”

The one bright spot is that the present situation (which is how things actually are) is holding up. The other bright spot is that consumers are more pessimistic about the overall economy than they are about their personal financial situations.

Times are still good for landlords as the CoreLogic Single Family Rent Index rose 14% YOY in April. Some numbers are absolutely staggering: Miami was up 41% on a YOY basis. Orlando was up 26%. The downside is that these numbers will almost certainly add to inflationary pressures going forward.

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