Morning Report: Existing Home sales still muted

Vital Statistics:

	Last	Change
S&P Futures	2565.8	5.3
Eurostoxx Index	390.2	1.1
Oil (WTI)	51.0	-0.3
US dollar index	86.7	0.2
10 Year Govt Bond Yield	2.35%
Current Coupon Fannie Mae TBA	102.875
Current Coupon Ginnie Mae TBA	103.938
30 Year Fixed Rate Mortgage	3.9

Stocks are higher after the Senate passed a budget resolution which allows tax reform to go forward. Bonds and MBS are down. 

Existing Home Sales increased 0.7% in September, according to the National Association of Realtors. This is down 1.5% YOY. September's number was only slightly higher than August, which was the lowest reading in a year. The median home price rose 4.2% to 245,100. Inventory is still a big problem, down YOY at 4.2 month's worth from 4.5 a year ago. The first time homebuyer was 29% of sales, which was a drop. There is a complete dearth of listings at the low end of the market. 

The Senate passed a budget resolution last night on party lines (with Rand Paul voting against) which allows tax reform to go forward on a simple majority. There are still a couple of differences between what the House and Senate are willing to accept. The House wants to see revenue-neutral tax reform, while the Senate is willing to accept an increase in the deficit. The House version includes spending cuts to offset the tax cuts, while the Senate version envisions additional revenue from allowing more oil production in Alaska. They hope to have a deal by the end of the year. 

General Electric missed earnings badly this morning, however this appears to be a bit of a kitchen sink release for the new CEO. Regardless, the stock is down 6% this morning. GE historically has been a bellwether for the entire stock market, but today the FAANGs run the show. 

The next Fed nominee is reportedly a horse race between Jerome Powell and John Taylor. Trump is expected to make his announcement in the next couple of weeks. Insiders say that Powell is the favorite of the two. Both nominees are more hawkish than Janet Yellen, which means rates will go up faster and higher, at least at the margin. In all honesty, the practical differences between Yellen and these nominees is not all that large. It probably won't make any difference to the economy. 

The increasing digitization of real estate transactions has increased the risk of fraud. Scammers are issuing emailed instructions to change wire transfer destinations on closing day. The best step buyers can take is simply to be aware of the potential for fraud and to verify everything, especially changes in wiring instructions. 

The latest CoreLogic Market Pulse takes a look at the effects of the hurricanes on local real estate markets. They estimate that 70% of the flood damage in the Houston area is uninsured. This will be a nightmare for loan servicers. Separately, Black Knight Financial Services is seeing about a 9% jump in past-due mortgages due to the hurricanes. In fact, September had the first year-on-year increase in delinquencies since 2010.