May 23, 2012

EU Angst Rides Over Better Housing Data

May 23, 2012

EU Angst Rides Over Better Housing Data

Analyzing housing data is getting a bit complex because there are many distressed and all-cash sales occurring. That means that they don’t appear in the Mortgage Application or FHFA data (below).

Until we get a lot more people working we are not going to see a significant recovery in housing.

The fundamentals are not driving markets today. EU/Greek angst is causing flight-to-quality buying of U.S. Treasuries and mortgages (MBS). Today MBS have rallied back to near all-time highs and rates could reclaim record lows if the rally holds.

What is happening in Europe is systemic. Capital is moving out of some countries and into others and banks are facing existential threats. I’ll resist saying “things can’t get much worse” until eurozone drama plays out further.

Here’s a rundown of today’s U.S. fundamentals…

New Home Sales (April 2012)
– New Home Sales (seasonally adjusted annualized rate) 343,000
– +3.3% month/month, +9.9% year/year
– Previous was 332,000, revised up from 328,000 originally reported
– Median price $235,700
– New Home Sales bottoming but still: file this under “not as bad as it was but still not good”
– Why? Because since 1963, annual average new single family home sales is 671,000 (WSJ)
Full report
– Below is a great New and Existing Sales chart from CalculatedRisk (and here’s yesterday’s Existing Home Sales):

Mortgage Applications (week ended 5/18/2012)
– Purchase Index, Week/Week -3.0%
– Refinance Index, Week/Week +5.6%
– Composite Index, Week/Week +3.8%
– Lower rates = more refinancing
– Lower purchase index indicates housing still troubled by unstable economy
– Purchase recovery is localized

FHFA House Price Index (March 2012)
– +1.8% Month/Month
– +2.7% Year/Year
– By recent standards, this increase is SpaceX
– This report measures prices on homes with Fannie/Freddie loans