Stocks are higher this morning after good numbers from Micron. Bonds and MBS are down small.
Personal incomes rose 0.7% MOM in May, according to BEA. Personal spending increased 0.7% as well. The PCE price index rose 0.4% MOM, while the core (excluding food and energy) rose 0.3%. On a YOY basis, the headline inflation rate rose 4.1%, while the core rose 3.4%. All of these numbers were in line with Street expectations.
The ROAD bill, which passed Congress with overwhelming support, is stuck at Trump’s desk. He wants Congress to pass the Save America Act, which targets election integrity and requires voter ID. The bill has been passed in the House, but remains stuck in the Senate. Democrats are united against voter ID, which means it cannot garner the 60 votes necessary to pass it in the Senate. Trump would like to see it passed under reconciliation, which requires only 51 votes. Reconciliation is supposed to be used only for budget items, not legislation.
The ROAD bill does some good stuff with manufactured homes, but really is mainly a messaging bill which is why it was passed so easily. The Federal government can’t do much more than jawbone local jurisdictions about regulatory burdens, and the institutional investor ban is a feel good measure that will have limited impact on home prices. In fact, the seven-year sale requirement for build-to-rent introduces a constraint on that business, which mathematically means you will get less of it.
New home sales fell 6.8% YOY to a seasonally adjusted annual rate of 580,000 units in May, according to Census. At the end of the month, there were 496,000 homes for sale representing a 10.4 month supply. As we saw in KB’s earnings release, new homes are oversupplied and builders are cutting prices. The median sale price was 424,900, unchanged year-over-year.
As any capital markets guy knows, aggregators have an insatiable appetite for non-QM loans, as every Tom Dick and Harry gets into the business. Non-QM issuance is up some 81% in the first 5 months of 2026, according to banking expert Chris Whalen. DSCR loans are up almost 100%.
One of the truism about markets is that as more players enter a space, more and more marginal investments are made. No-ratio DSCR loans are common, although there is increased scrutiny on collateral. This is an area to watch, especially since the private equity stocks are getting beaten up again as investors fret about Q2 redemptions.
