Morning Report: Home prices continue to accelerate upward

Vital Statistics:

S&P futures33996.6
Oil (WTI)38.25-0.29
10 year government bond yield 0.79%
30 year fixed rate mortgage 2.90%

Stocks are higher this morning after yesterday’s sell-off. Bonds and MBS are up small.

The Senate left for its pre-election break, so stimulus plans will have to wait until the lame-duck session. Who knows what that will look like.

Home prices continue to soar, according to the Case-Shiller Home Price Index. Prices rose 0.5% MOM and 5.2% YOY. This is the biggest increase in 2 years. Meanwhile, the FHFA House Price Index rose 1.5% MOM and 8% YOY. The FHFA index only looks at homes with conforming loans, so it excludes jumbos and all-cash sales. The drop in interest rates is increasing the amount that borrowers can afford, which is supporting home prices, along with a tight inventory picture.

Durable Goods orders rose 1.9%, which was much higher than expectations. Core Capital Goods (a proxy for business investment) rose 1%

Loans in forbearance decreased slightly to 5.9%, according to the MBA. “The share of loans in forbearance declined only slightly in the prior week, after two weeks of a flurry of borrowers exiting as they reached the six-month mark,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “There continues to be a steady improvement for Fannie Mae and Freddie Mac loans, but the forbearance share for Ginnie Mae, portfolio, and PLS loans all increased. This is further evidence of the unevenness in the current economic recovery. The housing market is booming, as shown by the extremely strong pace of home sales last week. However, many homeowners continue to struggle, as the pace of the job market’s improvement has waned.”

New Rez reported earnings yesterday, which disappointed the Street. The erstwhile non-QM lender is now focusing on conforming loans and trying to build a consumer direct model. Consumer direct originations rose 12% QOQ to $3.4 billion, while overall origination was up 118% QOQ to $18.1 billion.


Author: Brent Nyitray

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

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