Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
New home sales are going down.
New home sales plunged in May, the biggest MoM drop since June 2022.
The median sales price increased 3% from a year ago to $426,600 last month, marking the first year-over-year price gain in 2025.
The plunge in new home sales came as mortgage rates ticked back higher.
Another example of the carnage left behind by President Autopen (Joe Biden).
Fed Chair Jerome Powell’s favorite song: “No sugar tonight” for the mortgage market. The Fed provided plenty of sugar during the Covid crisis of 2020.
Mortgage rates grew under Biden from under 3% to nearly 8%, helping to choke off housing demand.
The good news? Median home price growth YoY has been negative since 2023 whilr average hourly earnings YoY has been positive and steady.
Please Jerome, lower rates!! We are in a ring of fire with high housing prices and high mortgage rates.
All aboard! The crazy mortgage train! Home prices rose 39% under Biden while mortgage originations at large banks fell -61%. The mortgage market is still recovering from Bidenomics!
Mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 13, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 14 percent higher than the same week one year ago.
The Refinance Index decreased 2 percent from the previous week and was 25 percent higher than the same week one year ago.
Home prices rose 39% under Biden while mortgage originations at large banks fell -61%.
The Fed’s themesong: Keep on printing!
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.5 percent on June 17, down from 3.8 percent on June 9. After recent releases from the US Census Bureau, the US Bureau of Labor Statistics, the Federal Reserve Board of Governors, and the Treasury’s Bureau of the Fiscal Service, the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real government expenditures growth decreased from 2.5 percent and 2.3 percent, respectively, to 1.9 percent and 2.1 percent, while the nowcast of second-quarter real gross private domestic investment growth increased from -1.9 percent to -1.4 percent.
GDP growth corresponds to Fed money printing.
Here is the breakdown. True, real GDP growth has been slowing over June.
Should President Trump fire Fed Chair Jerome Powell and replace his with someone else like Treasury Secretary Scott Bessent? The answer is … YES!
Why? First, there was a massive response to the Covid outbreak in 2020. And the monetary stimulus (aka, stimulypto) has never been removed.
The Fed Funds Target Rate (upper bound) remains high at 4.50% and M2 Money supply is $21.8 TRILLION.
Second, The Fed could help reduce the interest paid on the massive Federal debt load when the debt if refinanced.
The US Treasury yield curve tends to follow anticipated Fed moves.
Of course, The Fed should be abolished. But a step in the right direction would be to fire “Foul Powell” who is on the prowl.
Fed Chair Jerome Powell.
May Rent inflation 3.81% YoY, down from 3.98% in April, lowest since Jan 2022.
May Shelter inflation 3.86% YoY, down from 3.99% in April, lowest since Nov 2021
In general, CPI increased 0.1% MoM after rising 0.2 percent in April; Over the last 12 months, the all items index increased 2.4 percent before seasonal adjustment. The index for all items less food and energy rose 0.1% in May, following a 0.2% increase in April.
The index for shelter rose 0.3% in May and was the primary factor in the all items monthly increase. The food index increased 0.3% as both of its major components, the index for food at home and the index for food away from home also rose 0.3% in May.
In contrast, the energy index declined 1.0% in May as the gasoline index fell over the month.
Indexes that increased over the month include medical care, motor vehicle insurance, household furnishings and operations, personal care, and education.
The indexes for airline fares, used cars and trucks, new vehicles, and apparel were among the major indexes that decreased in May.
Core inflation is up 2.787% YoY, considerably lower than under Autopen Biden.
M2 Money is currently growing at 4.3%.
I’ll feel a whole lot better when CMBS office serious delinquenies get below 10%. But serious delinquencies on office space is currently at 10.59%.
The US Treasury yield curve is steepening.
Office delinquencies are likely to rise in Los Angeles as Governor Newsom sits on his greasy hands as LA burns.
CC Rider! 30Y MBC Current Coupon (CC) spreads is widening.
And metals are along for the ride! Gold and silver are soaring!
I am glad all over … because the AI boom is delivering a record contribtion to US GDP.
And US home prices are contracting making housing more affordable.
I don’t care what you did when you lived in Fort Worth, but at least home prices are contracting.
The Fed’s favorite inflation indicator – Core PCE – fell once again in April to its lowest since April 2021 at +2.5% YoY.
And The Fed keeps on printing money!
Supercore inflation is down to -0.023 MoM.
The Fed is thinking that they can help.
Confounded Interest - Anthony B. Sanders 
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