Existing home sales fall – The Daily Tearsheet

Vital Statistics:

Stocks are lower this morning on no real news. Bonds and MBS are up.

Existing home sales fell 5.9% in March, according to the National Association of Realtors. The inventory of homes for sale rose 8.1% to reach 1.33 million units, which represents a 4 month supply. This is still a seller’s market as 6 – 6.5 months’ worth of supply has historically been considered a balanced market.

The median home price climbed 2.7% to reach $403,700.

“In a stark contrast to the stock and bond markets, household wealth in residential real estate continues to reach new heights,” Yun said. “With mortgage delinquencies at near-historical lows, the housing market is on solid footing. A small deceleration in home price gains, which was slightly below wage-growth increases in March, would be a welcome improvement for affordability. With real estate asset valuation at $52 trillion, according to the Federal Reserve Flow of Funds, each percentage point gain in home prices adds more than $500 billion to the household balance sheet.”

Donald Trump has taken steps to eliminate the use of the disparate impact theory in discrimination cases. This theory puts the burden of proof on the defendant as opposed to the government in a fair lending case as the government is relieved of any requirement to prove intent. Statistical evidence of an anomaly (intentional or not) is enough to force a settlement. The problem is that with modern data-mining techniques if the government wants to find an anomaly, it will be able to find one. If it stands, this removes a potential landmine for mortgage originators

In other economic news, durable goods orders rose 9% last month, which was well above expectations, however if you strip out transportation it was flat. Initial jobless claims inched up to 222,000 while the Chicago Fed National Activity Index turned negative, indicating a slowdown in the economy.

The Atlanta Fed GDP Now model sees -2.5% GDP growth in the first quarter: