Stocks are lower after closing out a blockbuster quarter. Bonds and MBS are down.
Home prices were flat MOM and rose under 1% YOY according to the Cotality Case Shiller Home Price Index. The hip to be square trade continues, with the Midwest and Northeast posting the biggest gains while the Sunbelt and the West are posting declines. As inflation is running close to 4%, we are seeing home prices fall in real, inflation-adjusted terms.
“April’s figures confirm that U.S. home prices remain essentially flat, with the S&P Cotality Case-Shiller National Home Price Index up a scant 0.8% year over year, just above March’s 0.7% pace… With inflation accelerating to 3.8% in April, U.S. home values have now declined in real terms for an 11th straight month, further eroding inflation-adjusted housing wealth….The affordability pinch remains a key headwind. After dipping below 6% earlier this year, 30-year mortgage rates climbed back to 6.3% in April, keeping financing costs elevated. In this higher-rate environment, home price growth remains constrained, with housing largely treading water in nominal terms and falling in real terms.”
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Consumer confidence improved in June according to the Conference Board. Most of these consumer confidence surveys are really just gasoline price surveys, as that appears to be a big driver of confidence in general. The Present Situation index declined, however expectations improved. Consumer views of the labor market darkened.
“Consumer confidence inched up in June as falling oil prices in recent weeks provided some relief to consumer inflation fears,” said Dana M Peterson, Chief Economist, The Conference Board. “Consumer appraisals of current business conditions were slightly more positive compared to last month. However, perceptions of the current labor market softened measurably as the percentage of consumers saying jobs were ‘hard to get’ rose to 22.5%, the highest level since January 2021 (22.8%). Moreover, consumers anticipate little change in the labor market six months from now. This was offset by improving expectations for business conditions and incomes.”
Inflationary expectations eased, with expectations still above 5%. Note that inflation expectations have generally been quite a bit higher than actual inflation rates:
Is that a problem with consumers? Or the way the inflation indices measure inflation?
Job openings improved to 7.6 million, according to the JOLTS job openings. Notable increases were seen in manufacturing, trade transportation & utilities, and professional / business services. Government was flat. Finance fell, as did leisure / hospitality and health care / social assistance. The quits rate was steady at 1.9%.
Mortgage applications were flat last week as purchases increased 1% and refis fell 1%. “Mortgage rates eased slightly last week as oil prices declined. As a result, mortgage applications increased modestly, with an uptick in purchase activity offsetting a smaller decline in refinances,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications remain ahead of 2025’s pace and have exhibited year-over-year growth for almost three months, as prospective homebuyers are finding opportunities in markets with ample inventory and easing home-price growth. ARM loans accounted for less than 8% of applications, the lowest share since January, as the yield curve continues to flatten with relatively higher short-term rates.”
