Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
According to the Atlanta Fed’s GDP Now REAL time model, Q3 Real GDP is 5%.
The subcomponents of GDP growth are as follows:
So much for the doom and gloom of Trump’s tariff “war” or Trump’s Iran “war.” 5% Real GDP growth is outstanding!
And The Fed keeps on printing money (M2)! Keep on printin’!
Large bank mortgage originations have crashed and burned since 2022. The Fed has raised rates following the Covid outbreak and have not cut rates in a significant manner.
Another problem facing the US economy is that housing prices have over doubled since 2015.
My reaction to the Fauci testimony in Congress.
I am surprised that no one in Congress asked Dr, Fauci about how Covid crisis impacted the housing market.
US home prices are clearly unaffordable for younger households, given the dearth of true starter homes. As of Q1 2026, REAL US residential property prices fell -2.1% YoY.
China’s real residential property prices are declining even faster than the US.
The US Federal Reserve is printing money M2 at a 5.6% YoY pace. Slower than during the Covid outbreak, and slower than the decade prior to Covid.
China is printing money at a gutwrenching pace (10.5% YoY as of August 2019). Note that China has historically printed money faster than The Federal Reserve.
Global Central Banks are the Neegans of the global economy.
MBA Mortgage Purchase Index down -3.7% over the past week after climbing +1.2% in prior week…30y mortgage rate rose to +6.45% up from +6.37% and highest in a month.
With the Federal government playing an outsized role in the housing and mortgage markets, the Federal goverment is like an enormous Mantis Shrimp.
High home prices show signs of cooling, mortgage rates remain fairly constant, while new home sales increase by 47k in March. Despite rising mortgage rates.
The bigger picture? New home sales remain relatively depressed after the Covid outbreak in 2020.
More than half of major U.S. metropolitan areas posted year-over-year home price declines in February, with Denver (-2.2%) displacing Tampa (-2.1%) as the weakest market, according to data from the S&P Cotality Case-Shiller Index released Tuesday.
Los Angeles (-0.8%) and Washington, DC (-0.1%) also joined the list of markets with falling home values, signaling weakness that expanding out of the long-suffering Sunbelt region.
kkk
Mortgage employee headcount has fallen to lowest level since the housing bubble and mortgage crisis of 2005-2008.
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.
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.
Confounded Interest - Anthony B. Sanders 
You must be logged in to post a comment.