Morning Report - The homeownership rate continues to fall

Vital Statistics:

	Last	Change	Percent
S&P Futures	2101.6	-3.1	-0.15%
Eurostoxx Index	3728.1	-43.3	-1.15%
Oil (WTI)	57.05	0.1	0.11%
LIBOR	0.279	0.002	0.72%
US Dollar Index (DXY)	96.47	-0.297	-0.31%
10 Year Govt Bond Yield	1.95%	0.03%
Current Coupon Ginnie Mae TBA	103.1	-0.2
Current Coupon Fannie Mae TBA	102.2	-0.3
BankRate 30 Year Fixed Rate Mortgage	3.77

Markets are flattish this morning as the FOMC begins their meeting. Bonds and MBS are down. 

Consumer Confidence slipped in April, to 95.2 from 101.3. Consumers’ appraisal of current-day conditions continued to soften. Those saying business conditions are “good” edged down from 26.7 percent to 26.5 percent. However, those claiming business conditions are “bad” also decreased from 19.4 percent to 18.2 percent. Consumers were less favorable in their assessment of the job market. Those stating jobs are “plentiful” declined from 21.0 percent to 19.1 percent, while those claiming jobs are “hard to get” rose from 25.5 percent to 26.4 percent. The current reading is just about the historical average.

The FOMC meeting begins today. This is should be the last meeting where rate hikes are off the table. Given the weak first quarter, and subsequent economic weakness, the consensus has shifted markedly from a June hike to a September hike. As an aside, we will get the advance estimate for Q1 GDP tomorrow, and the consensus is that the economy grew at 1%. Granted, some of that is weather-driven, but there is no question the economy has slowed dramatically from the Q214-Q315 pace of 4.6%-5.0%. The jobs report next week will be huge. 

Home Prices increased .93% month-over-month and 5.03% year over year, according to Case-Shiller. Overall, prices are about 10% below their 2006 peaks, however some hot markets like Denver and San Francisco have surpassed that peak already. Price inflation is being driven by a lack of supply, not wage growth, which means that prices will probably flatline once new home construction kicks into gear or until wages start increasing. We will get a good read on wages this Thursday, with personal income and personal spending. 

The homeownership rate fell to 63.7% in Q115, from 64% in the fourth quarter of 2015. Pretty much all of the increase that started with the Clinton Administration's homeownership initiatives in the mid 90s have been given back.