Elevated delinquency levels have not affected expected losses, however, due to home price appreciation, Fitch Ratings said.

Retail lenders, including Beeline, Tomo Mortgage and Rocket Mortgage, settled with the department over infractions like submitting a false certification to not having the proper liquidity to be in the program.

A pair of bills, one with bipartisan support, look to address the issues around heirs’ property so these families can have clear title on their homes.

The agreement, in which the real estate giant admits no wrongdoing, will cover around 70,000 agents.

Real estate brokerage stocks tumbled Thursday on waning expectations for Federal Reserve interest-rate cuts, and as a disappointing earnings release raised concern about the sector’s outlook.

As 2024 has progressed, economic data–especially inflation data–have made it increasingly clear that rates will not be coming down nearly as soon as the Fed (and the market) expected. Rates are driven by multiple factors.  At present, inflation is chief among those, followed by the economy.  In general, higher inflation and economic strength coincide with higher rates.   Inflation and economic data evolved in such a way as to offer some light at the end of the high rate tunnel at the end of 2023.  Even the Fed acknowledged the shift by lowering its 2024 rate projection by half a percent in December.   But 2024 has proven to be a frustrating year so far for everyone who’d been hoping that inflation and rates were finally on the way back down.  We weren’t necessarily expecting to see any new fireworks this week, but we got them anyway. The trouble began on Thursday morning with the release of the quarterly GDP data.  One component of GDP is “personal consumption expenditures” (PCE).  One manifestation of the PCE data is a price index which in turn has a variation that excludes food and energy to give us the Core PCE Price Index. Core PCE is akin to Core CPI and it happens to be preferred by the Fed when it comes to tracking the 2% inflation target.  There are several different Core PCE measurement methods, which can make things fairly confusing on weeks when the data is released.  They include:

Decent Recovery After Friday’s PCE Numbers Clarify Thursday’s PCE Numbers

Thursday’s quarterly PCE numbers were much higher than expected.  That meant an increased risk that Friday’s monthly numbers would follow suit.  While today’s PCE was higher than expected in places, the important month-over-month core PCE was in line with expectations (but only because last month was revised higher). In short, inflation is still higher than the Fed wants it and higher than the market expected, but not quite as high as yesterday’s report suggested–at least not for the month of March (Jan and Feb, however, were even higher than the market previously traded). There was a moderately good rally after the data and then a sideways grind in the PM hours with yields remaining higher than they were before all this fun began on Thursday morning.

Econ Data / Events

Monthly Core PCE

0.3 vs 0.3 f’cast, 0.3 prev

Annual Core PCE

2.8 vs 2.6 f’cast, 2.8 prev

Market Movement Recap

09:00 AM A hair stronger overnight with additional gains after PCE data.  MBS up 6 ticks (.19) and 10yr down 4.5bps at 4.66.

11:08 AM Best levels of the day.  MBS up 9 ticks (.28) and 10yr down 4.1bps at 4.662.

01:53 PM Off the best levels, but very calm trading.  MBS up a quarter point.  10yr down 3.1bps at 4.673

05:16 PM Out like a sideways little lamb.  MBS up 10 ticks (.31).  10yr down 3.9 bps at 4.665

WARNING: once you get past the 1st paragraph here, things start to get a bit “mathy” and esoteric.  The takeaway is that there’s an actual way to reconcile today’s 0.3 vs 0.3 monthly core PCE result against yesterday’s 3.7 vs 3.4 annual result. 
Yesterday’s GDP data included the Core PCE Price Index, which came in at 3.7% vs 3.4% forecast.  It suggested that today’s Core PCE Price Index reported in the Incomes/Outlays report would also be higher than forecast since it comes from the exact same underlying data.  Surprisingly enough, the monthly change in March was right in line with the 0.3% expectation (.317% before rounding).  This came down to a few issues with the most important change being upward revisions to January and February. 
Those accounted for most of yesterday’s big beat. Today’s new number for March also contributed but that’s not reflected in the monthly headline due to rounding. It may seem like a big discrepancy given between forecasts and reality, but that is due to Q1’s numbers being annualized to get the year over year number (3.7%) as opposed to simply looking at March 2024 vs March 2023 (2.8%).
In other words, the core PCE price index for Jan-Mar is used to calculate a percent change from Oct-Dec 2023.  That change is then annualized (multiplied by 4).  So if Q4 was on the soft side and Q1 saw some acceleration, it makes for a bigger number than the actual year-over-year change.  We now know the actual year over year change due to today’s monthly release (the 2.8 vs 3.7 thing in the past paragraph). 
As for the size of the beat in yesterday’s numbers, here’s how it probably went down:
Forecasters are trying to guess a number that would be just a bit higher than 121.165, which was February’s core PCE index.  They would then add that to Feb and Jan to get a quarterly total and multiply by 4 (annualize the quarter) to get Thursday’s PCE forecast of 3.4%.  Here’s the data they knew before yesterday:

If one were to take an average of the last 4 increases in line 6, it would be .2875.  Let’s add that to February to arrive at 121.4525.
Now we take our hypothetical March number and add that to the rest of Q1 to arrive at 363.4665.  We can divide that by the sum of Oct/Nov/Dec 2023, which is 360.442.   The answer is ultimately a forecast of 3.35643%, which rounds up nicely to yesterday’s 3.4% forecast.  Boom, now you’re an economist.  Congrats.
Now here’s the issue. Not only was March’s actual number higher than expected, but Jan and Feb were both revised up.

The new Q1 total is 363.755.  If we calculate the percent change versus the same Q4 of 360.442, we do indeed arrive at number that rounds up to yesterday’s 3.7% shocker (3.67659706693449, if you must know).
So how was today’s monthly number of 0.3% an accurate forecast?  This is partly due to February’s upward revision and partly to the fact that 0.3167 rounds down to 0.3%.  In reconciling the importance of annualizing shorter-term numbers and rounding issues, consider an example of two different 0.3% monthly readings where one comes from an unrounded number of 0.251 and another from 0.349.  One of those adds up to 3% annual inflation and the other to 4.2%, but both would be reported as 0.3% month over month.  
Long story short, all the math works out and the forecasts even make sense between Thursday and Friday.  The only new information (apart from March’s PCE numbers, which were completely unknown), was the revision to the previous 2 months.  It is true that traders were smart to expect a worse number on Friday based on the quarterly surge, but if they had known that Jan/Feb would both be revised up as much, they may not have been as panicked yesterday.  This doesn’t mean we just got good news on inflation, only that reality is not quite as scary as yesterday made it seem. 
Trading levels reflect this as MBS and Treasuries are still a hair weaker than they were before yesterday’s data, but much stronger versus yesterday’s close.

There seems to be a bit of a baby boom going on out there. Prospective home buyers who need a place for a growing family quickly find out that residential lending isn’t without its share of tears. Next time you’re dealing with an upset borrower or loan officer, here’s something you can try. “We are committed to solving the rental crisis in Australia. By providing high quality prefabricated homes, available for immediate hire or purchase, we fight the rental crisis one portable cabin at a time!” But combined, Australia and New Zealand’s population is only 31 million, about the same as Texas. In the States, Utah Gov. Spencer Cox and Lt. Gov. Deidre Henderson shared their goal of building 35,000 new starter homes by 2028. It seems that every house I see being constructed uses 2×4’s and the same materials I used when doing that in summer jobs. But here’s something: The world’s biggest 3D printer can a make a house in under 80 hours! Perhaps builders will take note. (Found here, this week’s podcasts are sponsored by Calque. With The Trade-In Mortgage powered by Calque, homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home.) Lender and Broker Products, Software, and Services Rocket Pro TPO helps its partners be stronger purchase pros. Its range of affordable products, including Purchase Plus, empowers brokers to find new opportunities. Purchase Plus helps expand reach to assist first-time homebuyers in underserved communities by offering credits towards their down payment or closing costs. With Rocket’s Product Compare tool, brokers can efficiently navigate all their affordable product options to identify the ideal fit for their clients. This level of service builds trust between brokers and their clients, reinforcing their expertise as Purchase Pros. Want to see it in action? Catch the demo in Rocket Pro TPO’s IGNITE Live replay. Rocket shares this and other innovative solutions to help brokers make the most of this purchase season. For more information, contact Rocket Pro TPO today!

Doxo plans to fight the FTC complaint, which focuses broadly on consumer finance, but there are signs of confusion about the company’s role in mortgages too.