Morning Report - home price appreciation is moderating

Vital Statistics:

	Last	Change	Percent
S&P Futures	1844.2	-1.7	-0.09%
Eurostoxx Index	3145.9	-11.4	-0.36%
Oil (WTI)	101.6	-1.2	-1.20%
LIBOR	0.234	-0.001	-0.32%
US Dollar Index (DXY)	80.08	-0.119	-0.15%
10 Year Govt Bond Yield	2.72%	-0.02%
Current Coupon Ginnie Mae TBA	105.5	0.0
Current Coupon Fannie Mae TBA	104.4	0.2
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.35

Markets are lower this morning on no major news. We had earnings from the Despot and Toll, who both reported better than expected numbers. Later on today, we will get numbers from mortgage REIT giant Annaly.

Case-Shiller reported home prices increased 13.42% year-over-year, while FHFA reported prices were up 7.7%. The FHFA index only looks at sales with a conforming mortgage so that accounts for the difference between the two indices. Case-Shiller includes distressed (cash only) sales as well as luxury sales. They noted that the month-over-month increases have been declining, signalling that momentum is starting to fall. That said, mid teens price appreciation is simply an unsustainable pace and a slowdown was inevitable. 

McMansion builder Toll Brothers reported better than expected first quarter earnings with deliveries up 52% in dollars and 24% in units. Contracts however have slowed - they only rose 14% in dollars and dropped 6% in units. Toll is beginning to have some tough comps so the numbers will moderate a bit. Weather was a factor again, as roughly half of their business is in the Northeast, Mid-Atlantic and Midwest. Toll is optimistic on the spring selling season, which has been echoed by other builders like Horton and Pulte.

The hits keep coming... JPM is cutting 8,000 jobs in consumer and mortgage banking. Dimon said that JP Morgan sets goal of "fortress" compliance / control environment. That choice of words encapsulates the current relationship between regulators and the regulated perfectly.

John Boehner travels to the White House for a rare meeting with Obama. (the last one was in 2012). I am sure the subject will be the minimum wage and immigration reform which are contentious subjects to say the least. Obama intends to go hyper-partisan into 2014, and his budget was basically a left-wing wish list, so I don't know what he intends to accomplish here, except to add a talking point that he met with House Republicans leaders and couldn't get anywhere with them.