Curly’s Oyster Stew? April Home Prices Grow At 20.9% YoY As Fed Is Slow To Remove Massive Monetary Stimulus (But Watch Out!)

US home prices are still skyrocketing as The Federal Reserve kept its massive foot on the monetary accelerator pedal.

CoreLogic’s home price index grew at a 20.9% YoY pace in April, but is expected to slow to 5.6% YoY in late 2022.

Remember peeps, The Fed still have its staggering monetary stimulypto in place.

The Fed is signaling its withdrawal of stimulus, causing mortgage rates to soar.

Given the slowdown of the US and global economy, we shall see if The Fed keeps to its tightening plans. As of today, the market is expecting The Fed to raise its target rate from 1% to 3.819% by February 2023. That is a 291% increase in The Fed’s target

The Fed trying to tame inflation (caused by The Fed and Biden’s energy policies and Congressional spending) is like Curly trying to eat oyster stew.

Heartaches By The Number! Under Biden, Mortgage Refi Applications Down -82.4%, Purchase Applications Down -7.5% And Mortgage Rates Up+80.7% (Fed FINALLY Begins Removing Stimulus!)

Heartaches By The Number … for American households and mortgage lenders as The Federal Reserve begins FINALLY removing monetary stimulus.

Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 27, 2022.

The Refinance Index decreased 5 percent from the previous week and was 75 percent lower than the same week one year ago. 

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 14 percent lower than the same week one year ago.

Under Biden, mortgage refi applications are down -82.4%, purchase applications are down -7.5% and mortgage rates are up +80.7%.

Then we have this headline: “Fed Starts Experiment of Letting $8.9 Trillion Portfolio Shrink”

The Fed is capping monthly runoff at $47.5 billion — $30 billion for Treasuries and $17.5 billion for mortgage-backed securities — until September. Those thresholds will then double to a combined $95 billion. That compares to a peak of $50 billion a month when the Fed performed the exercise starting in 2017.

As expectation of Fed rate hikes increase, mortgage rates have soared like Tom Cruise’s Super Hornet aircraft from Top Gun: Maverick climbing over the steep mountain.

And mortgage rates are up a bit today.

Meanwhile, The Federal Reserve begins shrinking their balance sheet for the first time since Yellen and company started shrinking it under Trump.

Trouble In Potomac City! US Treasury 10Y-5Y Curve Goes Further Into Inversion As Mortgage Rates Keeps Rising

We’ve got Trouble in Potomac City!

The US Treasury 10Y-5Y curve is going deeper into inversion.

The short end of the Treasury curve is rising, as expected, but declining at the 5 year tenor and beyond.

The aggregate Treasury Index is plunging as Fed Funds Futures signal 8.341 rate hikes over the next year.

Mortgage rates? Climbing as mortgage refinancing applications fall (as expected).

Is The Federal Reserve actually run by The Office’s Michael Scott?

Slowing! Mortgage Purchase Applications Down 2% From Previous Week, Down 8% From Same Week Last Year (Bankrate’s 30Y Mortgage Rate Rises To 4.46%)

Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 11, 2022.

The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 8 percent lower than the same week one year ago.

The Refinance Index decreased 3 percent from the previous week and was 49 percent lower than the same week one year ago.

Bankrate’s 30-year mortgage rate has surged to 4.46%.

Here is a photo of alligators in Great Falls, Virginia, up-river from Washington DC. They are likely congregating for the Fed Open Market Committee (FOMC) announcement today.

Fed Week! 10Y Treasury Yield UP 11.1 BPS, Mortgage Rates UP To 4.33%, Oil Down 7.5% (Russian, Ukraine Sovereign Curves Collapsing)

Yes, it is the much anticipated Fed Week! The Fed Open Market Committee (FOMC) will announce it decision (probably the first rate hike under Biden of 25 basis points).

This morning, the 10-year Treasury yield rose by 11.1 basis points and the Bankrate 30Y mortgage rate rose to 4.33%.

Actually, sovereign yields are up around 10 basis points in the US, Canada, and across the pond.

Fed Funds Futures are pointing to 7 rate hikes over the next year with 1.114 rate hikes on Wednesday. That means The FOMC may raise rates MORE than the 25 basis points expected my many (including me).

The US Treasury actives curve remains steeply upward sloping while both the Russian and Ukraine sovereign curves are steeply inverted and crashing.

Russia has pushed the weighted average maturity of its dollar sovereign bonds out to almost 12 years.

The most hilarious headline of the day is a Bloomberg opinion piece: “Fighting Inflation May Require the Fed to Be Brutal: Clive Crook” How about the Biden Administration relaxing oil drilling and pipeline restraints? Otherwise, brutal translates into causing a recession. Great suggestion, Clive! … NOT!

Feeling Hot, Hot, Hot! US Home Prices Grew At 19.1% YoY In January (Is US Housing Market Addicted To Gov?)

Feeling hot, hot, hot!

Corelogic released their January housing report and its a doozy.

Home prices nationwide, including distressed sales, increased year over year by 19.1% in January 2022 compared with January 2021. On a month-over-month basis, home prices increased by 1.4% in January 2022 compared with December 2021 (revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results).

But Corelogic is still forecasting only 3.8% YoY growth in 2022.

Home prices are hot, hot, hot in all states except North Dakota and New York. The fastest growing states are lower taxes, higher growth states.

Phoenix, Las Vegas and San Diego are booming. But Chicago and Washington DC are growing at near 9% YoY.

Case-Shiller’s December report show home prices growing at 18.84% YoY thanks to Fed stimulypto and historic low inventory of homes available for sale.

Is the US housing market addicted to gov?

Let’s see if the five expected rate hikes from The Fed materialize.

US 30-year Mortgage Rate Rises To 4.30% As 10-year Treasury Yield Plunges -8.2 BPS (Eurozone Yields Dropping Like A Rock)

As someone who needs to move to Ohio, I would really appreciate it if mortgage rates would more closely follow the 10-year Treasury yield. But alas, Bankrate’s 30-year mortgage rate just rose to 4.30% as the US Treasury 10-year yield dropped -8.2 basis points.

Europe. Middle East and Africa (EMEA) sovereign yields are all down over 10 basis points averaging around -15 bps.

Ukraine’s 10-year yield has plummeted by -48.3 bps this morning.

The anticipated meeting between Russia and Ukraine on Belarus soil was a failure. Likely due to Belarus showing-off their modern air force capabilities.

Slowing! US Pending Home Sales Declined -9.07% YoY In January As Mortgage Rates Rise (UMich Buying Conditions for Houses Falls To 71)

Well, at least markets recovered yesterday (Dow up 500 points this AM) from the Russian invasion of Ukraine. But now on to other news.

US pending home sales fell -9.07% YoY as mortgage interest rates began rising.

The University of Michigan Buying Conditions for housing fell to 71 as mortgage rates increase.

Case-Shiller National Home Price Index Still HOT In December +18.84% YoY As Active Inventories Die (Phoenix AZ Fastest Growing At 32.5% YoY While Washington DC Is Slowest Growing At 10.5% YoY)

The S&P CoreLogic Case-Shiller National home price index remained HOT in December, growing at a 18.84% pace. M2 Money YoY is still smoking at 13.11%.

All 20 metro areas in the Case-Shiller 20 index grew at 10% or higher YoY with my former home city Phoenix leading the way at 32.5% YoY house price growth. Washington DC, aka Mordor on The Potomac, was in last place at 10.5% YoY.

In terms of active inventory of housing, only Phoenix and Columbus Ohio are showing positive growth in active inventory YoY. But even Phoenix and Columbus saw a decline MoM (or month-over-month).

Including Existing Home Sales Active listings in the first chart, we see The Federal Reserve continuing to pump money at at 13.11% clip while active inventory is at an all-time low.

This is nuts.