Stocks are flattish this morning as earnings continue to come in. Bonds and MBS are down. There are rumors that talks between Iran and the US could restart tomorrow, but confidence in that is limited.
Pending home sales rose 1.5% in March, according to NAR. “Contract signings rose in March despite higher mortgage rates, pointing to pent-up housing demand,” said NAR Chief Economist Dr. Lawrence Yun. “A greater supply of inventory will help translate that demand into more home sales.”
“Demand sensitivity to mortgage rates is greatest among first-time buyers, particularly younger buyers,” Yun said. “As a result, boosting supply and new-home construction should focus on smaller, more affordable homes.”
“A good number of markets in the South experienced price cuts over the past year but recorded the strongest job growth,” Yun added. “That combination should lead to stronger housing market activity in the South this year.”
Fannie and Freddie are going to consider rent payment history in determining a borrower’s creditworthiness. “If you pay your rent on time, you are more likely to pay your mortgage on time,” Pulte said. “For decades, our housing system ignored that simple fact, because your credit score would never count it. That’s nonsense, because credit history should include rental history.”
Fan and Fred are allowing Vantage scores as well to help reduce costs. “This will benefit only applicants that are creditworthy and trustworthy,” [Department of Housing and Urban Development Secretary] Turner said. “We’ve been through the financial crisis, we understand that. The rigor will stay in place, but we want to make it more available and more affordable.”
I wonder how much this will affect Fan and Fred since borrowers who are most likely to need to use rent to qualify are FHA borrowers anyway.
Yesterday was a big day for homebuilder earnings. NVR missed quarterly estimates as net income fell by 34%. NVR is a luxury homebuilder so this means the appetite for McMansions is on the slow side.
Meritage reported a 55% decrease in earnings as revenues and gross margins fell: “With the spring selling season commencing this quarter, we experienced some improved demand, achieving an absorption rate of 3.6 net sales per month and sales orders of 3,664 homes. However, these results were below our expectations as 2026 began with a severe winter storm in January and then transitioned into military operations in Iran midway through the quarter, which negatively impacted consumer sentiment and mortgage rates,” said Steven J. Hilton, executive chairman of Meritage Homes. “In this environment, we acknowledge that capturing demand requires higher than anticipated incentive utilization, even as we look to optimize every asset while balancing pace and margin.”
M/I homes reported a decline in revenues and margins, leading to 36% decline in earnings per share. M/I has high average selling prices so it is more of a barometer of the high end of the housing market. The move-up buyer is staying in place with a mortgage in the 3% range, which is partially why starter homes are hard to get.
