The Market Composite Index, a measure of mortgage loan application volume, decreased 5.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6.3 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 10 percent lower than the same week one year ago. And -40% under Biden.
The Refinance Index decreased 14 percent from the previous week and was 12 percent higher than the same week one year ago.
It is still an unfavorable time to buy a home!
From the film “Ronin” that sums up actor Robert DeNiro in one sentence.
Spence (Sean Bean): “You know, you think too hard.” Sam (Robert DeNiro): “Nobody ever told me that before.”
How would DeNiro consider the 40% drop in mortgage purchase demand under Biden?
This pushed the price up 7.38% YoY – the fastest rise since October 2022…
“We’ve witnessed records repeatedly break in both stock and housing markets over the past year. Our National Index has reached new highs in six of the last 12 months.” says Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices.
Overall, US home prices reached a new record high in March (as median new home prices began to fall)…
Source: Bloomberg
San Diego continued to report the highest year-over-year gain among the 20 cities this month with an 11.1% increase in March, followed by New York and Cleveland, with increases of 9.2% and 8.8%, respectively.
Portland, which still holds the lowest rank after reporting three consecutive months of the smallest year-over-year growth, posted the same 2.2% annual increase in March as the previous month.
Luke suggested this implies “a strong demand for urban markets.”
No city has seen a MoM decline in price in 2024.
Home prices continue to track Fed Reserves closely, but a turning point may come soon…
Source: Bloomberg
Given the smoothing and heavy lag in the Case-Shiller data, it’s hard to find a causal relationship between prices and mortgage rates…
Source: Bloomberg
…but with rates remaining above 7%, it seems hard to believe prices can continue their advance.
Who the heck is HUD Secretary? It was Cleveland’s Marcia Fudge (a typical Biden political appointment). Now it is Adrianne Todman, from the US Virgin Islands and former executive director of the District of Columbia Housing Authority. Not exactly a high-powered resume for a cabinet post, Joe!
I saw former President Obama criticizing former President Trump for not passing “transformative” changes. That is, Trump didn’t sign any Obama-like transformative changes (like Obamacare). Truimp did try to slow down the damage done by Obama and his transformative agenda (e.g., open borders, wealth redistritution, green energy) that Biden has attempted to continue.
As we approach the party conventions and Presidential election of 2024, we saw the Economic Surprise Index (ESI) in May decline to -0.126.
Coupled with Biden’s negative buying conditions for housing (higher mortgage rates and soaring house prices), Obama’s Jacobian transformative economic fantasty is on thin ice.
Speaking of higher interest rates, US debt servicing costs currently make up 12% of government spending. Jacobin revolution = Cloward-Piven.
Let’s hope the Obama/Biden Jacobin revolution doesn’t get to this point!
The various talking heads from The Federal Reserve keep jawboning about whether to raise rates or not. One of the major drivers of inflation is … money. M2 Money growth YoY is growing again (blue line)! And with it, inflation has been rekindled.
Mortgage rates? There is a lag between M2 Money printing and conforming mortgage rate growth.
After (unexpectedly) tumbling in March, existing home sales were expected to rise modestly (+0.8% MoM) in April. Analysts were wrong as March’s data was revised marginally up from -4.3% MoM to -3.7% MoM and April printed -1.9% MoM (a big miss). That left existing home sales down 1.9% YoY…
Source: Bloomberg
That pushed the existing home sales SAAR back near COVID lockdown lows…
Source: Bloomberg
This really should not come as a surprise because, while homeBUILDERS remain optimistic that things will pick up, homeBUYERS are the least enthusiastic they have ever been about buying a home… going back almost 50 years…
Source: Bloomberg
And with mortgage rates still above 7%, we don’t see things picking up meaningfully anytime soon…
Source: Bloomberg
…and then there’s this…
Source: Bloomberg
Sales declined in all four regions, including a 2.6% decrease in the West and a 1.6% drop in the South
The median selling price increased 5.7% from a year ago to $407,600 – the highest for any April in data back to 1999.
Unlike in the new-home market, where rising inventories and the prevalence of incentives by builders have pushed prices down on an annual basis, the home-resale market is experiencing rising year-over-year price growth.
“Home prices reaching a record high for the month of April is very good news for homeowners,” NAR Chief Economist Lawrence Yun said in a statement.
“However, the pace of price increases should taper off since more housing inventory is becoming available.”
About 68% of the homes sold were on the market for less than a month, up from 60% in March, while more than a quarter sold above the list price.
Mortgage applications increased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 17, 2024.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1.1 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 11 percent lower than the same week one year ago.
The 30-year fixed mortgage rate declined for the third straight week, dropping to 7.01 percent – the lowest level in seven weeks. Thus, the Refinance Index increased 7 percent from the previous week and was 21 percent higher than the same week one year ago.
VA-insured mortgages prepay the fastest, followed by FHA-insured mortgages then conventional mortgages.
I know a place where the housing market is hot! Florida and Texas!
I learn something new everyday. Like Biden yesterday claimed has was VP during Covid (uhm, Covid was in 2020 and Biden left the office of VP in 2017). But nothing gets in the way of Biden and a good story! Like his whopper that he inherited 9% inflation from Trump (even CNN fact-checked this whopper and found it was false. It was only 1.4%!)
But inflation is still at 4.5%, according to the Cleveland Federal Reserve.
Now, there are many measures of inflation to choose from, from Core CPI of 2.1% YoY to Cleveland Fed’s Median CPI of 4.5%.
The US is on a “Highway to Hell!” thanks to flawed economic policies under Biden.
First, interest and mortgage rates under Biden have soared driving buying conditions for housing to all-time lows. Combine sky-high home prices with high mortgage rates and we have as serious affordability crisis.
Second, on the interest rate front, the 30-year Treasury bond is on track for the 3rd worst annual return since 1919 and Russia’s invasion of Ukraine. Not not the current invasion, but the 1919 invasion.
Third, China is dumping their holdings of US Treasuries and Agency Debt at record rates.
Of course, mortgage rates hit 18% in 1981. So, the term high mortgage rates is relative. The US had low rates for too long (Bernanke/Yellen) and mortgage rates are now in the 7% range, up 165% under Biden. And home prices are up 34% since Biden was sworn-in as President. Wow! Mortgage rates up 165% and home prices up 34% under Biden’s Reign of Error.
It turns out unionized employees extorting you on labor costs while the government mandates you produce a money-losing product isn’t a combination that leads to prosperity and profit. Go figure.
Now, it isn’t just car manufacturers that are balking from the idea of all electric vehicles: the trucking industry, once expected to eventually make the shift to all electric as well, is seeing tepid demand for new rigs, according to a new Wall Street Journal article.
Of course, the producer price index for electric trucks and equipment has soared under Biden (like everything else). PPI for electric trucks and equipment are up 33.6% under Biden and his disastrous green energy fiasco.
“The economics just don’t work for most companies,” Robert Sanchez, the chief executive of Ryder, said earlier this month.
Ryder’s experience highlights the difficulties state and federal governments encounter in encouraging truckers to transition from polluting diesel rigs to zero-emissions vehicles, the report says.
It also indicates that significant improvements in battery weight, range, and charging times are necessary for battery-electric trucks to effectively compete with diesel rigs in the cost-sensitive freight industry.
Rakesh Aneja, head of eMobility at Daimler Truck North America, told Wall Street Journal: “Quite frankly, demand has not been as strong as what we would like.”
Aneja said orders for its Freightliner eCascadia battery-electric semi truck are about the same this year as they were in 2023.
Battery-electric trucks are about three times more expensive than diesel rigs, the Journal notes. And while federal and state programs help offset purchase costs, significant hurdles remain due to high operating costs and setup challenges.
Truckers find these electric trucks difficult and costly to run, with installation of on-site charging facilities taking years. These trucks travel less than half the distance of diesel rigs per charge and require several hours to recharge.
Ryder launched a service a year ago to assist companies in setting up and maintaining battery-powered fleets. So far, it has sold only 60 vehicles, mostly light-duty trucks. Three companies use five battery-electric heavy-duty trucks, but only within yards for shuttling trailers.
Sanchez noted that unlike individual electric car buyers, companies will only switch to battery-electric trucks when they can compete with diesel on operational costs.
The cost of changing a fleet over is also expensive. Using data from 13,000 vehicles, Ryder analyzed the annual operating expenses of battery-electric commercial trucks and found they are significantly higher than those of diesel rigs. The analysis, assuming existing fast-charging infrastructure, considered costs like vehicle purchase, maintenance, labor, and fuel.
Ryder found that light-duty battery-electric vans increase annual operating costs by several percentage points, with the gap widening for heavier trucks. Operating battery-electric big rigs costs about twice as much annually as diesel trucks.
In California, converting a fleet of 25 commercial vehicles, including 10 heavy-duty trucks, from diesel to battery power would raise annual operating costs by 56%, or $3.4 million. In Georgia, the increase would be 67%, or $3.7 million. Ryder stated that these higher costs would add 0.5% to 1% to inflation.
The American Trucking Associations said of the U.S. EPA’s new rules mandating more BEV semi truck sales by the end of the decade: “Considering that 96% of U.S. trucking companies operate 10 or fewer trucks, these mandates are simply cost-prohibitive for most truckers.”
Confounded Interest - Anthony B. Sanders 
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