Morning Report - Very little construction in the Northeast

Vital Statistics:

	Last	Change	Percent
S&P Futures	1890.5	0.3	0.02%
Eurostoxx Index	3191.9	4.3	0.13%
Oil (WTI)	104.1	0.3	0.31%
LIBOR	0.229	0.002	0.97%
US Dollar Index (DXY)	80.37	0.112	0.14%
10 Year Govt Bond Yield	2.53%	-0.02%
Current Coupon Ginnie Mae TBA	106.4	0.0
Current Coupon Fannie Mae TBA	105.6	0.1
BankRate 30 Year Fixed Rate Mortgage	4.17

Markets are flattish this morning on no real news. Bonds and MBS are down. Today should be dull as most of the Street will probably be on the L.I.E. by noon. Bonds close early today.

New Home Sales came in at 433k, an increase from the upward-revised 407k the month before. The vast majority of the new homes are in the South, with 235k. The Northeast is deader than Elvis with only 22k new home sales. (look below for an explanation why). The Midwest and the West had 84k and 92k new sales respectively. Inventory was still low, with 5.3 months' supply. The median price dropped from $281,700 to $275,800.

A new article out of the New York Fed addresses the hollowing out of the middle class. At least it New York, the jobs lost in the Great Recession have been in middle-skill jobs, like teachers, construction, admin support. Those jobs have not come back. The buckets where jobs are growing have been in the higher-skilled jobs like engineers, financial analysts, etc as well as low-skilled jobs like retail, food service, etc. This is IMO partly the fault of New York State's extremely borrower-friendly (creditor unfriendly) foreclosure laws. While states like California have worked through their foreclosure inventory and are now building, there is virtually no new construction in New York State. In California, Texas, etc where there is building going on, construction workers are in high demand and wages are increasing. Yet another case of good intentions smacking into the law of unintended consequences. 

Does judicial review of foreclosures create deadweight losses? The Federal Reserve Bank of Cleveland asks that question. Anecdotally, I see the effects in New York State, where may homes sit vacant while the foreclosure wends its way through the courts. While there may be a useful part of this, where we ensure we don't throw people out on the street, many of these foreclosures are vacant. At that point, letting a vacant house sit does no one any good. 

Finally, I discuss housing reform, monetary policy, and the homebuilding sector with Louis Amaya on Capital Markets Today. Lots of housing wonky goodness.