Stocks are flattish this morning on no real news. Bonds and MBS are flat.
The US and Iran have reached a tentative deal to extend the ceasefire for 60 days. Of course there have been missile launches etc during the current ceasefire, so take that how you will. Regardless, oil prices continue to work their way lower and bonds yields are falling slightly.
New home sales fell 6% MOM and 12% YOY to a seasonally adjusted annual rate of 622,000. The median home price rose 8% to $422,500. This is up about 2.2% compared to a year ago. The inventory of unsold homes rose 2% to 489k, which represents a 9.4 month supply. This indicates a buyer’s market and is backed up by declining gross margins for the builders.
First quarter GDP was revised downward from 2.0% to 1.6% as investment and consumer spending estimates fell. Separately, durable goods orders rose 8%, which was well above expectations. Capital goods orders fell 1%.
Affordability fell in April, according to the MBA. The median mortgage application payment increased from $2,131 to $2,152. “Housing affordability conditions weakened slightly in April, as mortgage rates edged higher and rising loan amounts pushed monthly payments up from March. However, affordability remains improved compared to a year ago, supported by lower mortgage rates and continued income growth,” said Edward Seiler, MBA’s Associate Vice President of Housing Economics and Executive Director of the Research Institute for Housing America. “Looking ahead, continued income gains and some stabilization in mortgage rates could help support better affordability conditions.”
The Purchase Applications Payment Index has been rebounding (affordability getting worse) as rates rise in response to the situation in Iran
Fair housing groups are suing the CFPB over its discarding of the disparate impact rule regarding lending discrimination. The disparate impact rule says that intent is irrelevant with respect to lending discrimination. If your numbers don’t precisely reflect the demographic makeup of your geographic area, you are guilty of discrimination, no questions asked.
Of course if you torture the data enough, you can get it to confess to anything, and with today’s data mining techniques if a regulator wants to find an anomaly, they will. And since fines tend to get recycled into forced donations to activist groups they are unhappy about the loss of a source of revenue. “This is the deliberate dismantling of 50 years of legal jurisprudence, regulatory guidance, and bipartisan consensus that lending discrimination has no place in America,” Lisa Rice, the CEO and president of the National Fair Housing Alliance, one of the plaintiffs that filed the lawsuit, said in a statement.
Of course no one is advocating for lending discrimination, but it is an acknowledgement that things have changed in the past 50 years and the whole concept has probably become irrelevant in the age of “push button, get mortgage.”
