Almost two-thirds of those aged 55 or over said they are sentimental about the house they have occupied long-term.

The sales pace is now at the low end of the range seen over the past year, suggesting limited momentum amid a lack of affordability.

Sideways Trend Looking Shifty

Using Treasury yields as a road map, the past week and a half has been excruciatingly sideways for the bond market.  Yields haven’t been over 4.29 during domestic hours for more than a few minutes and never far under 4.21.  Of those two levels, it’s the 4.29% “ceiling” that’s seen more activity and today brought a breakout–albeit a modest one.  Yields were just under 4.32% at the 3pm close, but not for reasons that are inspiring or significant as far as the classic bond-watching playbook is concerned.  It’s not that they don’t matter, only that things like Japan’s potential currency intervention and high Australian inflation are the smallest potatoes next to things like big ticket U.S. economic reports such as this Friday’s PCE, or several of the key reports in the first 2 weeks of July.  A shift in trends in response to that data would be more of a concern.  This is just an unlucky break on a small scale for now.

Econ Data / Events

New Home Sales

619k vs 640k f’cast, 698k prev

Market Movement Recap

10:08 AM moderately weaker overnight with additional selling around 9:15am.  10yr up 4.7bps at 4.296 and MBS down an eighth.

01:03 PM No major reaction to 5yr auction.  10yr currently up 6bps at 4.308.  MBS down 5 ticks (.16).

02:30 PM gradual losses since 1:30pm.  Weakest levels now with MBS down 7 ticks (.22).  10yr up 6.6bps at 4.315

03:52 PM Heading out near weakest levels with both MBS and Treasuries right in line with the last update.

After operating in an exceptionally narrow range since the beginning of last week, mortgage rates finally started doing something a bit different today.  Unfortunately, the differences result in a more noticeably move higher. Rates often respond to major economic data and other important developments that have a bearing on the bond market (rates are ultimately primarily a function of bond trading levels).  That said, there were no great examples of the typical “important developments” behind today’s move.  That’s one of the reasons that the move was fairly small relative to other notable examples. Top tier conventional 30yr fixed rates only moved up a few hundredths of a percent and not every borrower would see much of a difference from yesterday.  The next two days bring data and events that stand a bit better chance of inspiring a reaction, but we don’t really get to the biggest risks/opportunities until the first two weeks of July.

May turned out to be a dismal month for home sales. Sales of existing homes dipped a modest 0.7 percent from April, but new home sales fared far worse. The U.S. Census Bureau and Department of Housing and Urban Development report that sales of newly constructed single-family homes were at a seasonally adjusted annual rate of 619,000 units during the month. This is 11.3 percent below the sales level in April and down 16.5 percent compared to May 2023. However, April sales, originally estimated at 634,000 units, was upgraded to 698,000. Analysts had expected a better performance. Those polled by Econoday had a consensus forecast of 650,000 units. On a non-adjusted basis, 56,000 homes were sold during the month compared to 62,000 in April. Inventories continued to improve. At the end of May, there were 481,000 homes available for sale, nearly 13 percent more than a year earlier. The increase in availability is more apparent in the context of current sales.  The inventory for May is projected to be a 9.3-month supply at the current sales rate. This is a 14.8 percent increase from April and 34.8 percent from a year earlier. The median price of a home sold in May was $417,400 compared to $421,200 in May of 2023. The average price rose, however, increasing from $495,800 to $520,000. May sales fell compared to the previous month in all four regions and rose year-over-year in only one. In the Northeast, sales plummeted 43.8 percent compared to both April and the prior May. Midwest sales were down 8.6 percent for the month but rose 12.2 percent on an annual basis. The South saw decreases of 12.0 percent and 17.7 percent, respectively, from the two earlier periods. Sales slowed by 4.5 percent in the West and were down 20.9 percent from May 2023.

“Don’t waste a good crisis.” Continuing data breaches constitute a crisis, the latest example being LendingTree Inc., cloud-based data analytics firm Snowflake Inc., and MBS loan-level data. Headlines that talk about a “crisis” or something “plummeting” in price should be viewed skeptically, regardless of the topic. Here’s “Home Prices are Falling Fast.” Really? I say, much ado about nothing. Dropping 1-2 percent… really… plummeting? Are people jumping out of windows? How about looking at those markets like Austin over the last 10 years: Most were bound to take a breather after getting ahead of themselves. There is something that has garnered a lot of headlines in recent weeks, and that is the FHFA authorizing a pilot program for Freddie Mac to buy as much as $2.5 billion in second mortgages over 18 months, a shift that could ultimately make it cheaper for households to borrow against the equity in their homes. There are those, however, who say that this is much ado about nothing: more below. Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a warranty, eliminating repurchase worries. Hear an interview with Blue Sage’s Carmine Cacciavillani on his nearly four decades in the mortgage industry as a solutions provider creating complex software-based business solutions. Software, Products, and Services for Lenders and Brokers

The absence of relevant domestic market movers has been a theme all week.  While that has gone hand in hand with relatively uninspired bond market movement so far, today has been complicated by overseas developments.  Initial pressure came from sharply higher inflation numbers in Australia.  After that, runaway weakness in USD/Yen is fueling concerns over actual or potential intervention from Japan (i.e. selling Treasuries to buy Yen-denominated assets).  Big pops in Yen have indeed coincided with mysterious spurts of Treasury selling so far this morning, with a bit of a delay.

North American firm Voxtur Analytics said a U.S. mortgage investor group backing a new slate of board nominees hadn’t provided some information Canada requires.

Cook expects three- and six-month inflation rates to continue to move lower on a “bumpy path,” with monthly data similar to the “favorable” readings seen in the second half of 2023 for the rest of the year.

The announcement comes as the bureau’s director regularly voices doubts about whether algorithmic models can be entirely nondiscriminatory and warns companies of potential enforcement from violations.