As the broader market continued rubbing its eyes in disbelief over the Fed’s exceptionally calm attitude on inflation, bonds continued to improve today.  Stronger bonds mean lower rates.  The average mortgage lender was able to drop rates to the lowest levels in nearly 2 weeks–just a hair above March 11th levels. Most of the bond market improvement was in place before 9am and things were very calm after that.  This meant minimal mid-day price changes.   Next week has less by way of consequential calendar events compared to this week and it’s also made shorter by the Good Friday Holiday closure.  After that, volatility risks will be increasing quickly as the first week of April brings several highly consequential reports. 

9 Day Weekend For The Bond Market

While it’s not technically a 9 day weekend for the bond market, it might as well be.  It’s not that the upcoming week is inconsequential in terms of economic data and events, just that the data isn’t on a high enough tier to change the big picture.  Perhaps if rates were closer to boundary of their recent range we could entertain next week’s reports helping to spark a lead-off toward higher or lower rates, but from our current perch, the most likely outcome would simply be a revisiting of a recent range boundary.  The fact that next Thursday is an early close before a full closure on Friday only adds to the case for traders tuning out until April 1st.  As for today specifically, it was a winner in terms of bond market gains, but  not for any overt or interesting reason.

Market Movement Recap

09:00 AM Flat to slightly stronger overnight with additional gains at 8am.  MBS up almost a quarter point and 10yr down 5.5bps at 4.214.

12:48 PM Some weakness into 11am, but bouncing back since then.  MBS and Treasuries both at same levels as last update.

02:55 PM Heading out right in line with the same old levels.  MBS up 6 ticks (.19) and 10yr down 5.1bps at 4.218.

Rather than easing back from the January level as expected, existing home sales shot significantly higher in February, The National Association of Realtors® (NAR) said pre-owned single-family houses, townhouses, condominiums, and cooperative apartments sold at a seasonally adjusted annual rate of 4.38 million units. This is an increase of 9.5 percent from the 4.0 million unit pace the previous month and the largest monthly increase since last February. Sales still trailed that month’s 4.53-million-unit rate by 3.3 percent. Analysts polled by Econoday had a consensus estimate for sales of 3.92 million units while Trading Economics had projected the rate at 3.94 million. Single-family home sales grew to a seasonally adjusted annual rate of 3.97 million in February, a 10.3 percent gain, but were down 2.7 percent year-over-year. The annual sales rate for condos and coops (410,000 units) was 2.5 percent higher than in January, but 8.9 percent below the February 2023 pace. Despite the increase in sales, the number of homes available for sale also climbed, rising 5.9 percent from January and 10.3 percent from the previous February to 1,07 million units. This is estimated at a 2.9-month supply at the current rate of sales. Still, inventory remains well below the five-to-six-month supply considered a balanced market. The median existing home price for all housing types in February was $384,500, an increase of 5.7 percent from $363,600 a year earlier. It was the eighth consecutive month of year-over-year price gains and was the highest price ever recorded for the month of February. The median price for a single-family home was $388,700, a 5.6 percent annual increase while condos appreciated by 6.7 percent to a median of $344,000.

In the current regime of bond market movement, traders have been running from one side of the field to the other in an attempt to get in on the action surrounding inflation data and labor market data.  There hasn’t been much in between apart from Fed communications that tend to reinforce or refine an interpretation of the data.  This week’s Fed reinforced the most recent ceiling in yields/rates and we’re not terribly likely to challenge the recent floor without another round of big-ticket data.  For that, we’re waiting at least until next Friday (PCE), and considering bonds are closed next Friday, the focus is probably better-placed on the following week’s NFP.

The day is off to a decent start with yields down more than 5bps, but again, consider that in the context of the chart above.  3 out of the past 3 days have seen the same trading range and the same pace of “lower lows.”  
There are no significant scheduled events on tap.  

I saw a sign recently: “Psychic Fair Cancelled Due to Unforeseen Circumstances.” No one can see into the future, or can read minds, and communication is always a good thing. But if I had to predict something, mortgage-related fees (what is disclosed, and how, at closing) will be something in which the CFPB would become increasingly interested. The CFPB believes that “junk” fees are driving up housing costs, and wants to hear from you. Regarding costs, many lenders are wondering about the proposed NAR settlement, its costs, and even dual licensing. Will we see an increase in the number of dual licenses with the recent NAR settlement, and what about the states that do not allow a person to maintain both NMLS licenses and Realtor Licenses simultaneously? Attorney Brian Levy addressed dual compensation in one of his Musings. (Found here, this week’s podcast is sponsored by Visio Lending. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Today’s has a roundtable discussion from the ICE conference in Vegas with Brett Brumley, Matt Kovac, Justin Demola, and Rob Chrisman on automation and its benefits to lenders and vendors.) Lender and Broker Services, Products, and Software Truv Teams Up with Fannie Mae to Revolutionize Borrower Verifications! We’re thrilled to announce that Truv is now a conditionally authorized report supplier for mortgage lenders using Fannie Mae’s Desktop Underwriter® (DU®) validation service. With Truv’s Day 1 Certainty support lenders can reduce risk of fraud and buybacks by leveraging real-time data directly from the source, lower costs by reverifying a borrower’s income and employment data at no additional expense, accelerate growth by increasing pull-through rates and closing loans faster and improve productivity by reducing time spent collecting data to underwrite loans. Learn more here!

The Community Home Lenders of America alleged one provider’s employment verification service is charging fees it considers excessive in a letter to federal agencies.

The questions about whether the Home Loan banks receive a public subsidy has been settled. All that remains is for lawmakers to take steps to redirect that subsidy toward public benefits rather than corporate profits.

Birkmeier’s departure comes after CEO Varun Krishna’s hire last summer, and Austin Niemiec and Mike Fawaz’s promotions at the lender last January.

Texas’ largest markets saw the least amount of profit gained from flipped homes last year, with Austin even posting a loss, according to Attom.

State restrictions on the use of credit scores appear to help a wide range of consumers cut homeowner insurance costs to varying degrees, according to Matic.