Stocks are lower this morning on no real news. Bonds and MBS are up.
The Consumer Price Index rose 0.2% MOM and 2.4% YOY in January, which was below expectations. The core index which excludes food and energy rose 0.3% MOM and 2.5%, in line with expectations. Shelter rose 0.2% MOM and had the biggest impact on the inflation number. On a YOY basis, the index for shelter was up 3.0%.
Big increases were noted in utility gas services which rose 1.0% MOM and 9% YOY. This was offset by big declines in gasoline. It is strange to see refined products drop in price while the services part increases. My guess is this is weather-driven. Other notable increases was restaurants and medical services. Used cars declined.
Existing home sales fell 8.4% in January to 3.91 million. This was down 4.4% compared to a year ago. Weather was probably a big factor in the decrease, especially out East. “The decrease in sales is disappointing. The below-normal temperatures and above-normal precipitation this January make it harder than usual to assess the underlying driver of the decrease and determine if this month’s numbers are an aberration,” said NAR Chief Economist Dr. Lawrence Yun. “Affordability conditions are improving, with NAR’s Housing Affordability Index showing that housing is the most affordable it’s been since March 2022. This is due to wage gains outpacing home price growth and mortgage rates being lower than a year ago. However, supply has not kept pace and remains quite low.”
“Due to low supply, the median home price reached a new high for the month of January,” Yun added. “Homeowners are in a financially comfortable position as a result. Since January 2020, a typical homeowner would have accumulated $130,500 in housing wealth.”
The median home price was more or less flat YOY at $396,800. Affordability improved.
Delinquencies popped in the fourth quarter according to the MBA. FHA DQs were up big. “Mortgage delinquencies increased across all three major loan types – Conventional, FHA, and VA – in the last three months of the year,” said Marina Walsh, CMB, MBA’s vice president of industry analysis. “The most pronounced uptick was with FHA loans, which reached a delinquency rate of 11.52%, the highest level since the second quarter of 2021. While earlier-stage FHA delinquencies remained relatively flat compared to the previous quarter, later-stage, 90+ day delinquencies increased by 76 basis points. The FHA foreclosure inventory rate also grew to the highest level since the first quarter of 2020.”
Added Walsh, “The fourth quarter results may have been impacted by the expiration of pandemic-era, FHA relief options as well as disparities in the labor market – a key determinant of mortgage delinquency levels.”
