Financial Markets And Real Estate
For all the cheerleaders for housing markets, I hate to be the contrast voice.
Per Redfin, home sellers outnumbered buyers by 43.1% in March…up from 28.0% a year ago but shy of December’s 45.2%, which was largest gap on record.
This imbalance is occuring as credit quality is deteriorating.
I spoke at the American Action Forum in Washington DC on the future of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Speaking with me was Laurie Goodman from The Urban Institute. Laurie loves Fannie Mae and Freddie Mac and argued passionately against shutting them down. I argued to shrink their retained portfolios to zero and privatize them.
When Trump was elected President for the second time and the House of Representatives was controlled by Republicans, there was hope that Fannie Mae and Freddie Mac would be privatized. But alas, it was not to be.
In fact, the retained portfolios for Fannie Mae (left) and Freddie Mae (right) are increasing, not decreasing.
Here is my House of Representatives testimony on Fannie Mae and Freddie Mac.
We are going in the wrong direction under GSE regulator Bill Pulte.
Trump’s threats of bombing Iran back to the stone age continues. But the impact on Treasury yields is interesting. As the US economy continues to grow, the US Treasury curve takes on the familiar upward slope. With rising long rates. Particularly when compared to the negative humped yield curve of a year ago.
The Strait of Hormuz, a choke point for Middle East crude oil delivery to the rest of the world, has witnessed vessel crossings grinding to a near halt.
RIP Don Hansen of Hansen Surfboards.
Since the attack on Iran by Israelis and US forces, crude oil and gasoline prices have soared … back to Obama and Bidem era levels.
How about the impact of the Arctic cold blasts the northern states have received? You can see the spike in the Henry Hub Natural Gas Spot Price
We are seeing mean reversion in home prices in red cities and blue cities.
The price of homes in America’s to 20 cities rose just 0.16% MoM in January (the lowest MoM rise since August and well below the 0.35% MoM expected.
Source: Bloomberg
Home prices rose 0.9% YoY as mortgage rates have fallen. Home prices are still too high.
New York leads with a 4.9% annual gain, followed by Chicago at 4.6% and Cleveland at 3.6%, while Tampa fell 2.5%…
Don’t be confused. This isn’t leftists running to blue cities. It is mean reversion. The prior fleeing blue cities to red cities created a mean reversion effect where red cities home prices rose too fast and blue cities fell too fast.
Little Rock?
Nothing has been the same in the US housing market since the Covid outbreak of 2020. According to Redfin, there are nearly 50% more home sellers than buyers.
And the number of homebuyers has fallen to historic lows.
A good reason there are so few buyers is that home prices has soared after the Federal government’s spending spree after Covid.
Prayers for the soul of Noelia Castillo Ramos, murdered by the Spanish government. For being gangrape TWICE by immigrants then attempted suicide.
Mortgage applications decreased 10.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 20, 2026.
The Market Composite Index, a measure of mortgage loan application volume, decreased 10.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 5 percent higher than the same week one year ago.
The Refinance Index decreased 15 percent from the previous week and was 52 percent higher than the same week one year ago.
Nothing has been the same since Covid outbreak in 2020 and the resulting Federal government spemding spree.
Despite falling mortgage rates, analysts expected December’s drop in new home sales to accelerate in January… and accelerate they did… crashing a stunning 17.6% MoM (-2.7% MoM exp) – the biggest MoM drop since July 2013.
This huge MoM drop dragged sales down 11.3% YoY – the worst slide in three years.
Source: Bloomberg
This huge drop dragged the new home sales SAAR down to its lowest since 2022, catching down to existing and pending sales…
Inventories are up (Houses for sale in Jan. rose 0.4% m/m to 476,000), prices are down (Median down 6.8% YoY at $400k – lowest since 2024)…
…and remember these deals were signed in January – meaning this is not mortgage related (some suggesting weather impact – Northeast sales down 44.7% MoM, MidWest -33.9% MoM, but the scale is immense).
Moral of the story: US home prices are too high for millions of households to afford.
Producer prices are hot, hot, hot!
Producer prices were higher by 3.4% YoY (notably hitter than the 3.0% expected and up from the 2.9% prior). That is the hottest PPI since January 2025
Source: Bloomberg
More than half of the February rise in prices for final demand can be attributed to a 0.5-percent advance in the index for final demand services. Prices for final demand goods increased 1.1 percent.
Core PPI (ex Food and Energy) also soared (+0.5% MoM) pushing core prices up by 3.9% YoY – the highest since Jan 2025.
What will Powell and The Fed do??
US pending home sales bounced modestly in February (up 1.8% MoM vs -0.6% MoM exp and -10.% MoM prior).
Year-over-year home sales continue to decline (down 0.6% YoY).
Source: Bloomberg
Pending home sales in the South, the biggest home-selling region in the country, increased 2.7%.
They rose 4.6% in the Midwest and edged up in the West.
Confounded Interest - Anthony B. Sanders 
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