Pending Purchases of U.S. Existing Homes Unexpectedly Decline

Bloomberg – Princess Laya – Contracts to buy previously owned U.S. homes unexpectedly declined in January as higher mortgage rates, elevated prices and a limited number of listings pushed the index to a one-year low, according to figures released Monday from the National Association of Realtors in Washington.

Pending home sales gauge dropped 2.8 percent (forecast was for 0.6 percent advance), the most since May, to a one-year low of 106.4.

Contract signings rose 0.8 percent in December, revised down from a previously reported 1.6 percent gain
Index increased 2.7 percent from January 2016 on an unadjusted basis

Pending sales decreased in the Midwest and West

Pending home sales, which reflect contract signings, declined in January as affordability became an issue for potential buyers. A pickup in mortgage rates since the November election, higher home prices and fewer properties to choose from are limiting progress in residential real estate. At the same time, steadily increasing wages and a growing economy remain sources of support.

Here is a chart for Pending Home Sales (MoM) courtesy of Zero Hedge (the battery in my Bloomberg Anywhere card died).



And Pending Home Sales have declined with declining mortgage purchase applications (again, courtesy of Zero Hedge).


This is not a good sign. Very frustrating, much like trying to eat “Raw Oyster Stew.”


Are Restaurants Signalling Recession? Same Store Sales At Same Level As Just Before The Great Recession

According to the National Restaurant Association’s Restaurant Performance Index, same stores sales are about at the same level as just before The Great Recession.


While the CRB foodstuffs spot price index is about where it was just before The Great Recession, foodstuff spot prices have fallen quite a bit since 2011, causing households to choose cooking at home rather than dining out.


Is this a signal of a coming recession? Or that fact that households are trying to eat healthier? I am betting on the former.

Given the problems with traditional anchor chains in malls (like Macy’s, Sears, JC Penney’s, etc.), shopping mall and CMBS investors had better hope that mall restaurant chains don’t show the same pattern of declining same store sales.


Bubble? New Home Sales Disappoint (555k vs 571k Expected) — Back To 1990 Levels

New home sales for January 2017 were released and they were not up to expectations. 571k was the expectation, but only 555k were delivered. But there was a 3.74% MoM gain since December 2016.


New home sales continue to disappoint after the massive mortgage credit bubble of the last decade and are only at 1990 levels.


But the median price for new home sales continues to escalate and is well above the peak of the housing bubble.


Are we in a house price bubble?


Let me answer that this way. “Does your dog bite?” I am sure that Fed Chair Janet Yellen would answer “That is not my dog.”















FHFA House Price Index Rises 0.4% in December (+6.2% YoY) — Growth Rate Slows As Fed Halts New Asset Purchases

The FHFA released their house price index this morning. The HPI showed growth of 0.4% in December and 6.2% YoY.

The rate of growth in house prices has slowed to a nice steady pace after The Fed ceased new asset purchases.


Of course, slow wage growth for most of the US population isn’t helping house prices to grow. House prices continue to grow at almost 3x wage growth.


Unfortunately, not all cities have roared upwards with The Fed’s massive stimulus.


There is a danger of The Fed pumping so much air into housing prices.



Duty To Serve [Man] (It’s A Cookbook!): FHFA’s New Duty To Serve Manufactured Housing, Rural Housing and Affordable Housing “Preservation”

The regulator for Fannie Mae and Freddie Mac issued last year a cookbook for the always expanding role of Federal government support for housing. Here is FHFA’s site for Duty to Serve (Man).

Here is FHFA’s Jim Grays discussing the Duty to Serve which requires Fannie Mae and Freddie Mac to support 1) Manufactured housing, 2) Affordable housing preservation, and 3) Rural housing.

Bear in mind that FHFA is ordering Fannie Mae and Freddie Mac to subsidize (at taxpayer’s expense) and drive out competition from the non-taxpayer subsidized competition.

So yes, FHFA’s Duty to Serve is really a Duty to Serve Man. And it is a cookbook … for greater Federal government expansion into the housing finance.

More risk with no capital. Brilliant combination. Yes, a cookbook for financial distress.

Here is a photo of FHFA’s Jim Gray speaking to US Congress on the benefits driving out private market competition and expanding Federal government intervention.



Existing Home Sales Hot-Hot-Hot (Jump 3.3% MoM In January, While Median Price Rises 7.1% YoY)

Existing home sales for January remain hot-hot-hot.

According to the National Association of Realtors, total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, expanded 3.3 percent to a seasonally adjusted annual rate of 5.69 million in January from an upwardly revised 5.51 million in December 2016. January’s sales pace is 3.8 percent higher than a year ago (5.48 million) and surpasses November 2016 (5.60 million) as the strongest since February 2007 (5.79 million).

On a more negative note, existing home sales are finally back to 2001 levels near the beginning of the horid housing bubble of the 2000s.


Also back to 2001 levels is median price of exisiting homes sales at 7.1% YoY.


Mortgage purchases applications are only back to 1997 levels.


Let us hope we never repeat the house price and mortgage credit bubble that started in 1995.


Here is the original version of Hot-Hot-Hot by Buster Poindexter.



Highway To Hell! Hedge Fund Liquidity Falls to Danger Zone in U.S. Stock Market

Highway to the danger zone!

(Bloomberg) — There’s safety in numbers. Until a stampede starts.

That’s the theory underlying a study of hedge fund holdings by Novus Partners Inc., which sought to calculate how easily the market could absorb concerted selling by large money managers. Using an analysis that turns mainly on how much volume is occurring in stocks favored by professional speculators, Novus says liquidity is at an all-time low.


Herding hurts liquidity.


Or is THIS the highway to the danger zone? Or Highway To Hell?

Here is a video of hedge funds herding.