Morning Report - Consumer confidence and home price appreciation decline

Vital Statistics:

	Last	Change	Percent
S&P Futures	2073.9	9.5	0.46%
Eurostoxx Index	3559.1	46.0	1.31%
Oil (WTI)	47.5	0.1	0.23%
LIBOR	0.294	-0.002	-0.51%
US Dollar Index (DXY)	96.91	0.407	0.42%
10 Year Govt Bond Yield	2.26%	0.05%
Current Coupon Ginnie Mae TBA	104.1	0.1
Current Coupon Fannie Mae TBA	103.5	0.2
BankRate 30 Year Fixed Rate Mortgage	4.04

Stocks are higher this morning as Euro markets rally on M&A activity, and the 200 day moving average held for Chinese stocks. Bonds and MBS are down.

The FOMC starts their two day meeting today. 

Big drop in consumer confidence, according to the Conference Board. It fell from 99.8 in June to 90.9 in July: “Consumer confidence declined sharply in July, following a gain in June. Consumers continue to assess current conditions favorably, but their short-term expectations deteriorated this month. A less optimistic outlook for the labor market, and perhaps the uncertainty and volatility in financial markets prompted by the situation in Greece and China, appears to have shaken consumers’ confidence. Overall, the Index remains at levels associated with an expanding economy and a relatively confident consumer.”

The S&P Case-Shiller index of real estate values was basically flat in May, and is up 5% year over year. David Blitzer has an important comment on the first time homebuyer, which speaks to the education challenge those of us in the real estate business have to do:  “First time homebuyers are the weak spot in the market. First time buyers provide the demand and liquidity that supports trading up by current home owners. Without a boost in first timers, there is less housing market activity, fewer existing homes being put on the market, and more worry about inventory. Research at the Atlanta Federal Reserve Bank argues that one should not blame millennials for the absence of first time buyers. The age distribution of first time buyers has not changed much since 2000; if anything, the median age has dropped slightly. Other research at the New York Fed points to the size of mortgage down payments as a key factor. The difference between a 5% and 20% down payment, particularly for people who currently rent, has a huge impact on buyers’ willingness to buy a home. Mortgage rates are far less important to first time buyers than down payments.” Probably the biggest misconception in the market is the idea you must have 20% down.