Vital Statistics:
Stocks are higher this morning after good numbers from Nvidia. Bonds and MBS are up.
New home sales in January fell 1.1% YOY to a seasonally adjusted annual rate of 657,000. This was an 11% decrease compared to December. Sales increased in the South and West, while falling in the Northeast and the Midwest. The median new home sale price rose 3.7% to $446,300, while the average sale price fell 3.4% to $510,000. This indicates a shift away from luxury and more towards starter homes.
Fourth quarter GDP grew at 2.3% annually in the second revision, which was unchanged from the advance estimate. The consumer spending and investment components were revised downwards, while the government spending component was revised upwards.
Inflation was revised upward, with the quarterly PCE price index increasing 2.4% and the core rate increasing 2.7%. The headline number increased by 10 basis points and the core rate was revised upward by 20 basis points. Since these numbers are well in the past, it probably won’t affect the Fed’s outlook on inflation.
In other economic news, durable goods orders rose 3.1%, however they were flat if you strip out transportation orders. Initial Jobless Claims rose to 242k – presumably a lot of that is being driven by government workers being released by DOGE.
United Wholesale reported numbers yesterday, with fourth quarter volume of $38.7 billion and a gain on sale margin of 110 basis points. On the earnings conference call, CEO Mat Ishbia talked about the 2025 outlook:
So we think 2025 will be a better year. There’s more houses for sale. And then on the refi side, you’re talking about like there’s trillions of dollars that just need about a quarter lower rate than we are right now, like we’re not far off. The tenure is at 430, I think, ish. I always tell you 375 is where the money is at. But if it gets down closer to 4, you’re going to start seeing some of this, and we are prepared. And so we’re excited about the opportunity on refi. We’re going to continue to dominate on purchase, and we’re excited for what’s going to happen in 2025. We really think it’s going to be heck of a year.
I presume he is referring to the Fed Funds rate, and if you look at the Fed Funds futures, they are now predicting 50 basis points in cuts this year, with the second most likely outcome is 75.
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