Morning Report: New home sales rise 32% YOY

Vital Statistics:

 LastChange
S&P futures3425-28.6
Oil (WTI)38.95-0.29
10 year government bond yield 0.81%
30 year fixed rate mortgage 2.90%

Stocks are lower this morning as COVID-19 cases continue to rise and the window to pass a stimulus bill closes. Bonds and MBS are up.

New Home Sales fell 3.5% month over month in September to a seasonally-adjusted annual rate of 959,000. This is up 32% on a YOY basis. Inventory remains tight at 284,000 homes, or a 3 month supply.

The upcoming week will have a slew of important economic data, including GDP, personal income / spending, and house prices.

Guild mortgage went public at $15 a share. It also settled a FHA lawsuit from back in the day when the HUD sued everyone under the False Claims Act. While the mortgage bankers are making huge amounts of money, multiples are disappointing. IMO, the Street is underestimating how much money will be made when 75% of the $16 trillion mortgage market is refinanceable.

Mortgage rates are at the lowest on record. This goes back to the early 70s when the surveys started. Chances are these are the lowest mortgage rates ever, going back to the New Deal when the 30 year fixed rate mortgage was first created.

The typical homeowner made $85,000 on their home sale, according to ATTOM Data Solutions.

“Home prices and seller profits across the nation continue racking up new highs as the housing market remains relatively immune from the economic havoc caused by the Coronavirus pandemic. It’s almost as if the housing market and the overall economy are operating in different worlds,” said Todd Teta, chief product officer at ATTOM Data Solutions. “Things remain in flux, given the significant uncertainty about when the pandemic might recede or what impact the recent resurgence could have in different areas of the country. But with mortgage rates at rock-bottom levels and declining supplies of homes for sale, conditions remain in place for continued strong prices and returns.”

Author: Brent Nyitray

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

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