Morning Report - Pulte reports 17% drop in new orders

Vital Statistics:

	Last	Change	Percent
S&P Futures	1745.3	3.5	0.20%
Eurostoxx Index	3029.4	12.2	0.40%
Oil (WTI)	96.67	-0.2	-0.20%
LIBOR	0.238	0.000	-0.10%
US Dollar Index (DXY)	79.26	-0.005	-0.01%
10 Year Govt Bond Yield	2.49%	-0.01%
Current Coupon Ginnie Mae TBA	103.7	-0.1
Current Coupon Fannie Mae TBA	102.7	-0.1
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.27

Markes are higher this morning after a slew of generally positive earnings reports, most notably PulteGroup, Ford, and Coca Cola. Initial Jobless Claims came in higher than expected. California is still working through its claims backlog, so that number is probably understated. Bonds and MBS are up small.

Homebuilder PulteGroup announced third quarter earnings that topped analyst estimates. New orders were down 17%. On the conference call, they noted that "housing market conditions have changed", as demand is slowing on higher prices and mortgage rates. Their Washington DC markets, particularly the higher priced markets, were affected by uncertainty over the government shutdown. California is also "softer." However, they view this as short-lived within a sustained, multiyear housing recovery. Tellingly though, they bought back stock and debt instead of re-investing idle cash back in the business.

Bank of America was found guilty for Countrywide's sins and the government wants $850 billion, stemming from a plan to pay LO's bonuses on volume. The person who led the plan (dubbed the hustle) may be personally liable for fraud. Damages have yet to be determined. I wonder how much the government "encouraged" BOA to buy Countrywide. In every financial crisis, the first thing any government does is it to force shotgun weddings between the strong and the weak. 

Lender Processing Services "First Look" Mortgage Report has delinquencies up slightly (4.2%) month over month, but still down 12.6% year over year. 

Cash sales accounted for 49% of all residential sales in September, up from a revised 40% in August according to RealtyTrac. Last year, cash sales were 30% of all residential sales. Short sales accounted for 15% of all sales. REO sales were 10%. RealtyTrac estimates the median price was 174,000, which is vastly different than NAR's estimate of the median home price which is 199,000.