Despite upticks in new-home mortgage applications and homebuilder sentiment, analysts worry that interest rates will continue to cool the market.

The confidential agreement comes two years after a federal jury awarded the subservicer $22.6 million in damages in a case with numerous competing claims.

Rolling back PAVE signals a return to evidence-based housing policy and a rejection of flawed claims of systemic appraisal bias, say co-directors of the AEI Housing Center.

For the second consecutive week mortgage rates moved higher, as the likelihood of the Federal Reserve acting diminished after the Consumer Price Index report.

Bonds Unfazed by Econ Data

If you had to guess at the bond market’s response this morning based solely on the outcome of the 8:30am economic data, you’d be very well justified in assuming some selling/weakness.  While that may have been the case for a few moments, it was quickly replaced by bond buying as traders parsed the Retail Sales internals, revisions, and especially the inflation-adjusted spending implications. In a nutshell, the report showed an ongoing downtrend in discretionary consumer spending and that ended up being the trade of the day–even if it wasn’t a super huge trade. This was enough to keep bonds in positive territory for most of the day, despite an afternoon correction back to unchanged levels. 

Econ Data / Events

Retail Sales

0.6  vs 0.1 f’cast, -0.9 prev

Core Retail Sales

0.5 vs 0.3 f’cast, 0.2 prev
last month revised from 0.4

Import prices 

0.1 vs 0.3
last month revised to -0.4 from 0.0

Jobless Claims

221k vs 235k f’cast, 228k prev

Continued Claims

1956k vs 1970k f’cast, 1954k prev

Philly Fed 

15.9 vs -1 f’cast, -4.0 prev

Market Movement Recap

08:39 AM 10yr yields are up 1bp at 4.468. MBS are down 2 ticks (.06)

09:34 AM In positive territory now with MBS up 2 ticks (.06) and 10yr down 1.9bps at 4.44

02:11 PM MBS back to unchanged on the day and down an eighth from highs.  10yr up half a bp at 4.463

Despite all of the economic data and news headlines over the past few days, mortgage rates have barely budged since last Friday. That was not what we expected this week given the anticipation for the inflation reports that came out on Tuesday and Wednesday. Now today, a seemingly balmy Retail Sales report (something that would normally push rates higher) ended up being no big deal for the bond market that underlies mortgage rates.  There’s some rational justification for the paradox, however. After adjusting for inflation, the retail sales categories that speak to discretionary spending suggested an ongoing slowdown (something that would normally be good for rates). The underlying bond market actually improved after this morning’s data, but not enough to cause a big move in mortgage rates. With that, we have yet another day where the average 30yr fixed rate has changed by only 0.01 to 0.02%–about as small as day to day movement gets.   The economic calendar gets less interesting over the next two weeks.  It won’t be until the next jobs report in early August that we get our next major flashpoint–at least in terms of things that adhere to a schedule.  Unexpected headline developments are always a potential source of volatility.

“I forgot to put the seat belt on my five-year-old boy this morning and as we were leaving the trailer park, somebody shouted, ‘You’re an irresponsible father!’ I yelled, “Who the hell said that?! Stop the car, son!’” Lenders know that not all manufactured homes are trailers, and in fact there are some great MHs out there. In a few weeks I head to Michigan for the MMLA conference. It turns out that that over 25 percent of manufactured homes in Michigan are owned by private equity or similar entities per the Private Equity Manufactured Housing Tracker. In 2020 and 2021, they accounted for 23 percent of all manufactured home purchases, up from 13 percent between 2017 and 2019. Housing market trends will be discussed in today’s The Big Picture will start at 11:15AM PT, with Pete Mills from the Mortgage Bankers Association also discussing upcoming policy developments, GSE reform and the MBS guarantee, and what the MBA is watching. (Today’s podcast can be found here and this week’s are sponsored by Ocrolus. Ocrolus is transforming the mortgage industry with AI-powered data and analytics, featuring cutting-edge tools for automated indexing, income analysis, and discrepancy insights that empower underwriters to make timely, confident lending decisions. Hear an interview with Garrett, McAuley & Co.’s Joe Garrett on the future of mortgage commissions, debating whether automation, shrinking margins, and smarter underwriting tools will make 100-basis points payouts a thing of the past.)

There were multiple economic reports on tap this morning (4 of them in the 8:30am slot), but the headliner on a Retail Sales day is almost always going to be Retail Sales! In today’s case, it came out much stronger than expected.  Even when stripping out autos/gas/building materials (i.e. the “control group”), sales rose 0.5% vs a 0.3% forecast. This is the sort of thing that would normally put pressure on bonds, but that’s not the case today.  Why? Revisions are one consideration. Last month was revised down by the same amount that today’s number beat the forecast. Inflation is another consideration.  After adjusting for it, the control group continues to trend lower, not higher. In other words, sales may be increasing in terms of dollars, but people are buying less “stuff.” 
Bonds reacted by trading the headline at first (higher yields), but only briefly.  Traders were all over the “lower inflation-adjusted spending” narrative and quickly traded 10yr yields about 5bps lower from the highs.

A spike in the bank’s noninterest income powered its better-than-expected net income and revenue in the second quarter.

States warn that eliminating the BRIC program could leave rural areas vulnerable to extreme weather.