Hey, Carl. Yeah. Now, the biggest impact from the government shutdown could be on mortgage rates.The 10-year yield, which mortgage rates loosely follow, is now down to the lowest level since September 18. But mortgage lenders haven't reacted to this yet. They're still waiting to see if that's a firm move down or if it's going to move any higher at the end of the day.Now, next is in the National Flood Insurance Program or the NFIP. It will continue to pay out claims for existing policy holders, but will not ...

Core Insights - Mortgage rates are expected to decline as long-term bond yields fall, which is typically positive for home buyers [1][2] - The decline in Treasury yields is attributed to weaker-than-expected jobs data and the ongoing U.S. government shutdown, which may deter potential buyers [3] Group 1: Mortgage Rates - The 10-year Treasury yield decreased by 0.043 percentage points to 4.106%, the lowest level since mid-September [2] - The 30-year fixed mortgage rate was reported at 6.37% in a recent survey [2] Group 2: Economic Indicators - The drop in Treasury yields followed the release of disappointing ADP jobs data, indicating potential economic weakness [3] - The government shutdown is contributing to uncertainty in the housing market, which may keep buyers from making purchases [3]

Yeah, the refi boom we saw just a few weeks ago just went bust thanks to higher mortgage rates. The average rate on the 30-year fix for conforming loans increased last week to 6.46% from 6.34%. That's for loans with 20% down according to the Mortgage Bankers Association.Now, as a result, applications to refinance a home loan dropped 21% last week from the previous week. They had surged much higher just a few weeks ago when rates dropped to that three-year low just before the Fed cut its rate. This drop in r ...

Core Insights - The U.S. housing market shows a slight decline in home sales for August but maintains a year-over-year increase, indicating cautious optimism among real estate professionals for the fall market [1][2][3] Sales and Inventory - National home sales dipped by 0.2 percent in August, but there was a 1.8 percent increase in sales year-over-year [1][2] - Inventory levels remained relatively stable, with a minor decline of 1.3 percent from July, but an 11.7 percent increase compared to August 2024 [3] - The median home price reached $422,600, marking the twenty-sixth consecutive month of year-over-year price increases [3] Mortgage Rates and Market Dynamics - Mortgage rates are declining, with the average 30-year rate at 6.3 percent as of September 25, which is expected to stimulate sales [4] - An increase in mortgage applications, particularly for refinancing, suggests a shift towards a more balanced market [5][6] - The National Association of Realtors (NAR) anticipates continued slight decreases in mortgage rates, which could lead to increased homebuying activity [8] Regional Performance - The Midwest region saw a 2.1 percent increase in month-over-month sales, with median home prices rising to $330,500 [9] - The West experienced a 1.4 percent growth in sales, with median prices reaching $624,300 [14] - The Southern region reported a 1.1 percent decrease in month-over-month sales, but inventory has surged, particularly in Dallas, where it increased by 24 percent [18][19] Buyer Demographics - First-time homebuyers accounted for 28 percent of August sales, up from 26 percent in the previous year [32] - Cash transactions made up 28 percent of all buyer transactions, while individual investors or second-home buyers represented 21 percent [32] Affordability Challenges - Despite positive trends, affordability remains a significant issue, with only 21 percent of existing homes affordable for middle-income buyers earning $75,000 annually [33] - The NAR emphasizes the need for increased affordable housing to achieve a more balanced market [33]

Group 1 - Pending home sales in August rose 4% from July and were 3.8% higher year-over-year, indicating strong market performance [1] - Mortgage rates in August were slightly lower than in July, contributing to the increase in signed contracts for home sales [2] - A survey of realtors indicated that 19% expect an increase in buyer traffic over the next three months, up from 16% the previous month [3] Group 2 - Inventory in August fell for the first time since the beginning of the year, suggesting a tightening market [4] - Sales increased in three out of four regions, with the Midwest showing the strongest performance due to lower home prices [4]

Core Insights - Home contract signings increased by 4% in August, surpassing economists' expectations of a 0.4% gain, indicating a potential recovery in the housing market due to lower mortgage rates [1][5] - The Pending Home Sales Index reached 74.7, with a year-over-year increase of 3.8%, suggesting a gradual improvement in buyer activity [1][3] - The Midwest region experienced the highest growth in contract signings, with an 8.7% increase since July and a 6.7% rise over the past year, attributed to its relative affordability [6] Mortgage Rates - The average 30-year fixed mortgage rate has decreased from approximately 6.7% to around 6.3%, which is believed to be facilitating more homebuyers entering the market [5][6] - Lower mortgage rates are seen as a key factor enabling more homebuyers to sign contracts, according to the National Association of Realtors Chief Economist [5] Market Conditions - The housing market is currently in its third consecutive year of decline, with home sales projected to reach a 30-year low, although there is optimism that falling mortgage rates may stimulate activity in the fall [3][5] - Contract signings showed varied performance across regions, with increases in the Midwest, South, and Western US, while the Northeast saw a decline [1][3]

Valuation Metrics - Shiller's CAPE is currently at 40x, the highest level since the dot-com bubble, indicating a potentially expensive market [4] - Trailing P/E stands at about 28x, significantly above historical averages, calculated using earnings from the past 12 months [5] - Forward P/E is approximately 22x, also above historical averages, based on expected earnings over the next 12 months [6] - All valuation metrics suggest that the stock market is expensive, implying weak returns in the future [7] Historical Context - In mid-2014, Shiller's CAPE was about 26x, above its long-term average of 17x, suggesting the market was expensive [8] - The realized CAPE at that time was about 17x, indicating the market was not expensive due to healthy earnings growth in subsequent years [9] Macroeconomic Developments - Inflation is rising, with the core PCE price index up 2.9% year-over-year, above the Federal Reserve's 2% target [13] - Consumer spending increased by 0.3% month-over-month in August, reaching a record annual rate of $21.11 trillion [14] - Business investment activity improved, with core capex orders rising 0.6% to $76.7 billion in August [15] - Initial unemployment claims fell to 218,000, indicating a historically strong labor market [16] Housing Market Insights - Sales of previously owned homes decreased by 0.2% in August, while new home sales surged 20.5% to an annualized rate of 800,000 units [19][20] - The median existing-home sales price rose 2.0% year-over-year, marking the 26th consecutive month of price increases [20] Economic Outlook - The long-term outlook for the stock market remains favorable, supported by expectations for years of earnings growth [23] - Demand for goods and services remains positive, bolstered by healthy consumer and business balance sheets [24] - Economic growth is normalizing, with major tailwinds like excess job openings fading [25] - There is a disconnect between hard economic data and soft sentiment-oriented data, with tangible activity continuing to grow [26] Market Dynamics - The U.S. stock market may outperform the economy in the near term due to positive operating leverage from companies adjusting cost structures [27] - Risks such as political uncertainty, geopolitical turmoil, and energy price volatility remain present [28]

Core Insights - Mortgage rates have decreased, yet homebuying activity remains stagnant, with pending home sales declining for the first time in nearly three months, down about 1% year-over-year as of September 21 [1] - The average mortgage rate has fallen for nine consecutive weeks, reaching an 11-month low of 6.26%, but existing home sales dipped 0.2% in August from the previous month, indicating a stagnant housing market despite a 1.8% increase from a year ago [2] - Lower mortgage rates have led to a significant increase in refinancing applications, which surged 58% in the second week of September, while mortgage-purchase applications only rose by 3%, suggesting that lower borrowing costs are not effectively stimulating home purchases [3] Factors Affecting Housing Demand - Four main factors are impacting housing demand: elevated home prices, potential buyers waiting for mortgage rates to drop below 6%, limited new listings, and economic uncertainty [4] - Recent data indicates that top-tier 30-year fixed mortgage rates have increased slightly, reflecting rising Treasury yields and diminishing expectations for aggressive rate cuts from the Federal Reserve [5] - Job growth has not been robust, contributing to a negative outlook for the housing market, alongside lingering concerns about tariffs and recession fears [6] Buyer Sentiment - Buyer hesitation is prevalent due to concerns over job security, stock market performance, and overall economic conditions, leading many buyers to make offers with contingencies and a willingness to withdraw if their demands are not met [7]

Core Viewpoint - The recent performance of major home builders, particularly Lenar and KB Home, indicates that despite expectations of improved market conditions due to anticipated rate cuts from the Federal Reserve, actual sales and financial results have not met investor hopes, leading to a cautious outlook for the housing market. Group 1: Lenar's Performance - Lenar reported weaker than expected revenue and lower deliveries, with average selling prices only meeting expectations, resulting in a housing gross margin of 17.5%, which is 30 basis points lower than anticipated and 500 basis points lower than the previous year [3][4] - The company acknowledged continued softening of market conditions and affordability, with third quarter results reflecting these challenges [2][3] - Lenar's management indicated that while they delivered more units than expected, it required additional incentives that negatively impacted gross margins, and they expect current quarter earnings to fall below expectations [4][5] Group 2: KB Home's Performance - KB Home reported better than expected sales and average selling prices, but both metrics were still down year-over-year, and the company cut its full-year sales forecast significantly [11][12] - Management expressed a favorable long-term outlook for housing driven by demographics and a shortage of homes, but noted that short-term demand has not significantly increased despite lower mortgage rates [13][17] - The decline in mortgage rates has added approximately $30,000 of purchasing power for customers based on KB Home's average selling price, which is particularly beneficial for first-time home buyers [14][15] Group 3: Market Outlook - Both Lenar and KB Home emphasized the need for lower mortgage rates to stimulate sales, with management from both companies sounding optimistic about the potential for rates to decrease further [20] - Despite the Fed's recent rate cuts, long-term interest rates have been rising, raising concerns about a repeat of last year's market conditions where rate cuts did not lead to improved sales [10][20] - The overall sentiment from both companies suggests that while there are early signs of increased customer interest, a significant uptick in sales has yet to materialize, leading to a cautious approach in the housing market [6][19]

Group 1: Mortgage Rates - Mortgage rates increased for the first time since mid-July, with the average rate on a 30-year fixed mortgage rising to 6.3% from 6.26% last week [1] - The average rate on a 15-year fixed mortgage also rose to 5.49% from 5.41% last week [4] - Despite the recent uptick, mortgage rates remain near 11-month lows, providing opportunities for buyers and homeowners considering refinancing [5] Group 2: Housing Market Activity - Housing market activity remains robust, with purchase applications increasing by 18% and refinance applications rising by 42% compared to the same time last year [4] - Sales of new U.S. single-family homes surged to the highest level in over 3.5 years in August, although this may not accurately reflect the housing market's health [7] - Economists noted that the increase in new home sales was unexpected and may be reversed in the coming months due to volatile data and subdued homebuilder sentiment [9][10] Group 3: Economic Context - The Federal Reserve recently cut the benchmark interest rate by 25 basis points, bringing the federal funds rate to a new range of 4% to 4.25% [6] - The rate cut follows a period of economic uncertainty, during which the Fed left rates unchanged at its first five meetings of the year [6] - The current rate environment is seen as beneficial for affordability, despite only 28% of U.S. homes being affordable for the typical American household [5]