According to the US Census Bureau, sales of new homes fell 6.2% YoY in April.
No, it does not look like new home sales from the housing bubble burst of the ALT-A, private label MBS years.
Yes, near record low mortgage rates are helping to mitigate the horrid effects of the COVID-19 fiasco.
Home prices in March, according to the lagged Case-Shiller national home price index rose 4.4% YoY. COVID-19 epicenters Seattle and New York City both managed to see YoY gains in home prices in March. (Phoenix AZ is leading the nation in YoY home price growth at 8.2%, nearly twice the national average).
So far the COVID-19 epidemic does not look like the notorious housing bubble burst of the second half of the 2000-2010 decade of The Big Short frame. But the CMBX BBB- index of commercial mortgage-backed securities is getting crushed by retail, hotel and office losses.
Although this has nothing to do with real estate, this Bloomberg headline grabbed my attention: “Macron Pledges $9 Billion in Stimulus to Help French Carmakers.” Hey Macron, how about telling Renault, Citroën and Peugeot to make cars that buyers in US want to buy!
While the US Treasury 10-year has just hit modern history lows, the Freddie Mac 30-year survey rate is CLOSE to its all-time low rate!!
Meanwhile, former Minneapolis Fed President Narayana Kocherlakota is calling for The Fed to cut rates immediately!
The Fed’s rate-setting Federal Open Market Committee holds its next meeting on March 17-18. I don’t think that the FOMC should wait that long to deal with this clear and pressing danger. I would urge an immediate cut of at least 25 basis points and arguably 50 basis points. That’s a cheap insurance policy for the economy that the Fed shouldn’t pass up.