Morning Report - First time homebuyers 33% of sales - lowest since 1987

Vital Statistics:

	Last	Change	Percent
S&P Futures	2007.2	-3.9	-0.19%
Eurostoxx Index	3066.5	-15.8	-0.51%
Oil (WTI)	77.11	-1.7	-2.12%
LIBOR	0.232	0.000	-0.11%
US Dollar Index (DXY)	87.12	-0.187	-0.21%
10 Year Govt Bond Yield	2.32%	-0.03%
Current Coupon Ginnie Mae TBA	104.4	-0.1
Current Coupon Fannie Mae TBA	103.4	0.1
BankRate 30 Year Fixed Rate Mortgage	3.99

Markets are lower this morning along with European stocks. Bonds and MBS are higher.

In economic data, construction spending fell .4% in September, and August was revised upward to -.5%. Private residential construction fell and is up slightly on a year-over-year basis. 

The ISM Manufacturing Survey came in at a very strong 59, as the manufacturing recovery continues. The ISM New York Survey fell by a lot, however, as did factory orders. IBD / TIPP Economic Optimism ticked up, however. Remember consumer sentiment surveys are influence by gas prices. 

Oil is getting slammed as the Saudi Aramco cut the price of oil to the US in order to better compete with US domestic production. Lower oil and gas prices can provide a much-needed shot in the arm to domestic consumption. It could save the holiday shopping season for the retailers. 

Today is election day, and pretty much everyone agrees Republicans will take the Senate. What does that mean legislatively? I think the big legislative priorities for Republicans are corporate tax reform, the Keystone pipeline, and fixing Dodd-Frank (read: rein in the CFPB). Corporate tax reform will hinge on revenue-neutrality. Obama will want to cut rates and close loopholes on a revenue-enhancing basis. Republicans don't want to raise corporate taxes, so they will insist on revenue-neutrality. This may be too large an ideological bridge to cross. On the second issue, Keystone, lower oil prices are rendering that issue moot. Finally, there may be some possibilities on the CFPB, as the right wants to see it subject to some sort of accountability, and the affordable-housing advocates on the left are getting sick and tired of tight credit. Again, can Obama cross the ideological bridge that will subject him to scorn from the Elizabeth Warrens of the world? 

The first time homebuyer is still MIA, and that is still the biggest issue facing the housing market. In fact the share of home purchases to first-timers is the lowest since 1987 when the stock market crashed. Only 33% of buyers purchased their first home this year, down from 38% a year ago. Blame a lousy job market and tight credit. The highlights of NAR's survey can be found here.