Morning Report - a tale of two housing markets

Vital Statistics:

	Last	Change	Percent
S&P Futures	1827.8	3.3	0.18%
Eurostoxx Index	3128.9	-2.7	-0.09%
Oil (WTI)	103.3	-0.8	-0.72%
LIBOR	0.226	-0.002	-1.01%
US Dollar Index (DXY)	79.84	0.113	0.14%
10 Year Govt Bond Yield	2.65%	0.00%
Current Coupon Ginnie Mae TBA	105.6	-0.1
Current Coupon Fannie Mae TBA	104.4	0.0
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.3

Markets are up small on no real news. Bonds and MBS are flat

Inflation at the consumer level remains well-behaved, increasing at .2% month-over-month in March. On an annual basis, they rose 1.5%. 

The latest CoreLogic Market Pulse is out, and it has some good stuff in it. One of the things we have noted before is that there really is a tale of two markets - the high end, which is doing great, and the low end which is not. If you listen to the builders, you will see that average selling prices for new homes have been increasing at a mid-teens rate. This is not apples-to-apples appreciation, it is that the growth is in the larger segments. Apparently the average square footage of a new home has increased 200 square feet since 2008. 

The first time homebuyer has had a most difficult time, graduating college with a mountain of student loan debt and dismal job prospects. That may be changing, however as Barclay's has pointed out. College graduates are beginning to have a little more success on the jobs front, and this should usher in the return of the first time homebuyer, who really has been dormant since the bubble burst six years ago. 

Mortgage lending is hitting a 17 year low, as rates increase. According to the MBA, here are the dynamics at work: Mortgage rates jumped in mid-2013 as the Fed signalled tapering was at an end. This pushed up cash purchases to 40%, which helped fuel price increases, but also squeezed more Americans out of the market. This is the foundation for lower lending for the rest of the year.