Morning Report: Existing home sales fall

Vital Statistics:

S&P futures4,36723.2
Oil (WTI)71.621.19
10 year government bond yield 1.33%
30 year fixed rate mortgage 3.07%

Stocks are higher this morning as fears over an Evergrande contagion fade. Bonds and MBS are flat.

The Fed decision is due at 2:00 pm today. No changes in interest rates are expected, although there is the possibility we could see an announcement regarding decreased asset purchases (tapering). We will also get a press conference and new projections.

FedEx reported earnings this morning which came in lower than expected. Check this statement out in the press release:

First quarter operating results were negatively affected by an estimated $450 million year over year increase in costs due to a constrained labor market which impacted labor availability, resulting in network inefficiencies, higher wage rates, and increased purchased transportation expenses. This was partially offset by higher package and freight yields, increased international export express shipments and a favorable net fuel impact. In addition, while commercial ground and U.S. domestic express package volume increased year over year, continued supply chain disruptions have slowed U.S. domestic parcel demand compared to the company’s earlier forecast.

The stock is down 7% this morning. I wonder if this is going to be a theme when companies start reporting third quarter numbers in about a month.

Mortgage applications rose 4.9% last week as refis increased 7% and purchases rose 2%. “There was a resurgence in mortgage applications the week after Labor Day, with activity overall at its highest level in over a month, and purchase applications jumping to a high last seen in April 2021,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Housing demand is strong heading into the fall, despite fast-rising home prices and low inventory. The inventory situation is improving, with more new homes under construction and more homeowners listing their home for sale. Despite this week’s increase, purchase applications were still 13 percent lower than the same week a year ago.”

Existing home sales fell 2% in August, according to the National Association of Realtors. Existing home sales came in at an annualized pace of 5.9 million, which was down on both a month-over-month and year-over-year basis. “Sales slipped a bit in August as prices rose nationwide,” said Lawrence Yun, NAR’s chief economist. “Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory.”

The median home price rose 15% to $356,700, as inventory remains an issue. Speaking of inventory, we had a 2.6 month supply of unsold homes, which is well below a balanced market, which has about 6 months’ worth. First time homebuyers slipped to 29% which is another indication that people are getting priced out of the market.


Author: Brent Nyitray

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

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