According to the latest S&P CoreLogic Case-Shiller National Home Price Index, home prices in the United States grew by 3.2% in July. This ends a 15-month streak of decreasing year-over-year gains in the index that began in early 2018. However, home prices in the West continue their cooldown, with prices in Seattle falling for the third month in a row and home price growth in San Francisco falling very close to zero. Average home price growth in the top 10 metropolitan areas increased by 1.6%, down from the previous month’s 1.9% increase. In addition, the top 20 metropolitan areas entered its 16th straight month of slowing price growth, posting a gain of 2% year over year, down from 2.2% in June. Eleven of the top 20 metropolitan areas reported lower price increases compared to the previous month, which is unchanged from June. Phoenix sits at the top of the pack for the second straight month, and is followed by Las Vegas as the fastest-growing housing market in the 20-city index, with home price growth of 5.8% and 4.7%, respectively. Metros with the slowest price growth are made up predominantly by markets in the West, with Seattle, San Francisco and Los Angeles making up three of the bottom five, with home price growth of -0.6%, 0.2% and 1.1%, respectively. This month’s report brought us the first sign of housing market stabilization in over 18 months. What’s more, the geographic inversion in-home price growth has strengthened its grip, with Pacific markets making up half of the 10 markets with the slowest home price growth, while Southern and Midwestern markets make up half of the 10 markets with the quickest home price growth. This is a welcome sign to homeowners in these second-tier markets, where home prices have struggled in the recent past to rise above inflation for any extended period. Homebuyers in the most expensive but now slowest-growing markets in the Pacific are likely feeling flashes of relief, as a combination of low mortgage rates and moderate home price growth is easing what has been years of painfully low home affordability.
Trump’s Ukraine call transcript released as Wall Street brushes off impeachment inquiry
The Trump administration released the transcript of President Trump’s phone call with Ukrainian President Volodymyr Zelenskiy on Wednesday, a day after House Speaker Nancy Pelosi launched a formal impeachment against the U.S. leader. Wall Street shrugged off the release of the document and the impeachment inquiry. The Dow Jones Industrial Average was slightly higher, while the Nasdaq and S&P 500 were both slightly lower after the release. In the call, Trump raised unsubstantiated allegations that the former vice president sought to interfere with a Ukrainian prosecutor’s investigation of his son Hunter. “There’s a lot of talk about Biden’s son, that Biden stopped the prosecution and a lot of people want to find out about that,” Trump said to Zelenskiy. Trump came under fire after a whistleblower complaint alleged he pressured Zelenskiy to investigate former Vice President Joe Biden and his son Hunter. In the days before the call, Trump ordered advisers to freeze $400 million in military aid for Ukraine — prompting speculation that he was holding out the money as leverage for information on the Bidens. Trump has denied that charge, but acknowledged he blocked the funds, later released. Biden is currently one of the frontrunners among Democratic candidates looking to challenge Trump for the White House in 2020. At the exact time of the Ukraine call transcript release, Trump tweeted a video of Pelosi speaking on the House floor during the impeachment proceedings of former President Bill Clinton.
Hillary Clinton, the former Secretary of State and former first lady, tweeted shortly after the release, saying she supports impeachment. “The president of the United States has betrayed our country,” Clinton said in a tweet on Wednesday. “That’s not a political statement—it’s a harsh reality, and we must act. He is a clear and present danger to the things that keep us strong and free. I support impeachment.” The impeachment inquiry into Trump, announced Tuesday by Pelosi, focuses partly on whether Trump abused his presidential powers and sought help from a foreign government to undermine Biden and help his own reelection effort. Pelosi said Tuesday such actions would mark a “betrayal of his oath of office” and declared, “No one is above the law.” Major stock indexes slid Tuesday after Pelosi announced the impeachment inquiry, prompting speculation that political turmoil would undermine business-friendly initiatives from the White House.
NAHB – gains in home sales new post solid August
Sales of newly built, single-family homes increased 7.1 percent to a seasonally adjusted annual rate of 713,000 units in August off a revised upward reading in July, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. On a year-to-date basis, new home sales for 2019 are 6.4 percent higher than the same period in 2018. “With job growth continuing and lower interest rates in place, builders report rising confidence levels, and this is reflected in today’s solid sales report,” said Greg Ugalde, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Torrington, Conn. “We have seen a general rebound in the housing market since spring, as sales, starts and permits have all registered gains,” said Danushka Nanayakkara-Skillington, NAHB’s AVP for Forecasting and Analysis. “However, affordability remains a factor because buyers can’t benefit from lower interest rates if they don’t have the money for a downpayment.” A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the August reading of 713,000 units is the number of homes that would sell if this pace continued for the next 12 months. The inventory of new homes for sale was 326,000 in August, representing a 5.5 months’ supply. The median sales price was $328,400. The median price of a new home sale a year earlier was $321,400. Regionally, and on a year to date basis, new home sales are 11.7 percent higher in the South and 7.8 percent higher in the West. Sales are down 16.5 percent in the Northeast and 10.5 percent in the Midwest.
US-Japan trade deal on track
With President Trump and Japanese PM Abe set to meet at the U.N. Wednesday, a trade deal between the two nations is falling into place. “The negotiating process has been completed and the results will be submitted to the two leaders,” said Masato Otaka, Press Secretary, Foreign Ministry of Japan. “Everything is on track. The important thing is to focus on the entry into force.” Japan’s Foreign Minister Toshimitsu Motegi and US Trade Representative Robert Lighthizer met on the sidelines of the 74th UN General Assembly on Monday and, according to Japanese media, “fully agreed on all trade talks”. Motegi told reporters the deal “will be satisfactory to Japan” and the text would be released Wednesday. The two sides agreed US tariffs on Japanese automobiles would be rolled back sometime in the future with no further specification on exact timing. In exchange for the removal of taxes on Japanese automobiles, Japan would in turn decrease tariffs against beef imported from the US from 38.5 percent to 9 percent. The WTO Most Favored Nation (MFN) treatment is still a mainstay of the multilateral trading system and requires WTO members to provide favorable trade terms and remove tariff barriers as part of any bilateral trade agreement with another member. The removal of auto tariffs on Japanese imports would bring the US into compliance with this WTO regulation.
MBA – mortgage applications down
Mortgage applications decreased 10.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 20, 2019. The Market Composite Index, a measure of mortgage loan application volume, decreased 10.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 11 percent compared with the previous week. The Refinance Index decreased 15 percent from the previous week and was 104 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 9 percent higher than the same week one year ago. “U.S. Treasury yields trended downward over the course of last week, as the Federal Reserve meeting highlighted the elevated uncertainty in the economic outlook. However, despite falling yields, mortgage rates ticked up again and have risen 20 basis points over the past two weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The increase in rates led to fewer refinances, and activity has now dropped 17 percent over the last two weeks.” Added Kan, “Purchase applications also decreased, likely related to the two-week jump in rates, but still remained 9 percent higher than last year. The recent data on increased existing-home sales and new residential construction points to the underlying strength in the purchase market this fall.” The refinance share of mortgage activity decreased to 54.9 percent of total applications from 57.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.1 percent of total applications.
The FHA share of total applications increased to 11.4 percent from 10.9 percent the week prior. The VA share of total applications increased to 13.1 percent from 12.7 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.02 percent from 4.01 percent, with points increasing to 0.38 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) decreased to 4.00 percent from 4.01 percent, with points decreasing to 0.26 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.90 percent from 3.89 percent, with points decreasing to 0.23 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.46 percent from 3.42 percent, with points remaining unchanged at 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 5/1 ARMs decreased to 3.39 percent from 3.54 percent, with points remaining unchanged at 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.