Morning Report: Homes selling at record pace

Vital Statistics:

 

Last Change
S&P futures 3356 25.6
Oil (WTI) 42.44 0.82
10 year government bond yield 0.68%
30 year fixed rate mortgage 2.85%

 

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

 

Inflation remains muted. The producer price index (which measures wholesale inflation) rose 0.6% month-over-month, but is down 0.4% on a year-over-year basis. The consumer price index rose 0.6% MOM and is up 1% YOY. This is well below the Fed’s target of 2%.

 

Mortgage applications rose 6.8% last week as purchases increased 2% and refis increased 9%. “Mortgage rates fell across the board last week, as investors grew less optimistic of the economic rebound given the resurgence of virus cases,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Loan types such as the 30-year fixed, 15-year fixed, and jumbo all reached survey lows. Refi activity responded to these lower rates, with the refi share reaching almost 66 percent of all applications, its highest level since May. And the refi index jumped 9 percent, reaching its highest level since April, as both conventional and government applications for refinances increased.”

 

United Wholesale is offering a 1.99% 30 year mortgage. Of course you are going to have to pay points to get that rate, and some of it will depend on broker comp.

 

Solution to the affordable housing issue? Converting COVID-driven office and hotels to affordable housing. “That’s going to free up a lot of commercial space, which can be converted to affordable housing,” U.S. Housing and Urban Development Secretary Ben Carson said of the pandemic in a June 24 Fox News interview. “We are very much looking at that right now, looking at ways to be able to facilitate that transformation.” This model was used in the Rust Belt to help revitalize abandoned downtown areas.

 

The pace of homebuying is accelerating. According to Redfin, 46% of sellers are accepting an offer within two weeks. Home sale prices were up 9% YOY to a new high of $311,000. Meanwhile, on the supply side, listings are down 2.7% and the active inventory of homes for sale is down 28%. The list-to-sale ratio is 99%, a record.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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