While income decreased from the fourth quarter, it accelerated on an annual basis across NVR’s building and lending units.

Many legal experts think the Supreme Court will rule in favor of the Consumer Financial Protection Bureau in a case challenging its funding. Such a ruling would unleash a flurry of litigation that has been on hold pending the outcome of the constitutional challenge.

The mortgage lender and servicer announced that Ranjit Bhattacharjee, a capital markets veteran, and Kevin Barker, a financial analyst with two decades of experience, have joined its ranks.

Prevention through new building standards and mapping technology aim to keep home insurance rates down but mortgage bankers see challenges.

New single-family home sales increased 8.8% to a 693,000 annual pace last month, the fastest since September, government data showed Tuesday.

Straightforward Gains After PMI Data

Tuesday’s session was infinitely more interesting than Monday’s with the caveat being Monday was a total snooze-fest.  Bond market volumes were much closer to recent averages and there was even some logical, data-driven volatility.  As always, volatility can go both ways and today’s went the right way after S&P PMIs came in well below forecast in both Manufacturing and Services sectors.  Relative to recent norms, the move was far from big, but it looked big compared to Monday.  Notably, even before the data, yields were holding under the technical level at 4.65.  The gains merely solidify the sideways vibes that have been in place since the middle of last week.

Econ Data / Events

S&P Services PMI

50.9 vs 52.0 f’cast

S&P Manufacturing PMI

49.9 vs 52.0 f’cast

Market Movement Recap

09:58 AM Weaker overnight, but erasing losses after PMI data.  10yr down 2.6bps at 4.584.  MBS unchanged in 6.0 coupons, up 6 ticks (.19) from lows. 

10:31 AM MBS catching up with the rally, now up 5 ticks (.16).  10yr down 3.2bps at 4.578.

01:12 PM Solid 2yr auction.  Near best levels.  10yr down 3.7bps at 4.573.  MBS up 6 ticks (.19).

03:25 PM Off the best levels, but not by much.  MBS up an eighth on the day.  10yr down 1bp at 4.60

Mortgage rates are driven by day to day changes in the bond market.  Bonds are focused on the Fed and the economic data that shapes Fed decisions.  Today’s data isn’t necessarily big on the Fed’s radar, but the market reacted due to its implications on other data. Specifically, the S&P Purchasing Managers Indices (PMIs) came in lower than expected for both the services and manufacturing sectors. PMIs can be thought of as fairly timely, general barometers for the economy because they ask the financial decision makers at businesses about the current state of affairs as well as future plans.   One of the topics concerns “prices” which is the hottest of hot buttons for rates these days.  On that note, the data mentioned lower price pressures in April due to a deterioration of demand and a slight softening in the labor market. S&P’s PMIs aren’t as big of a deal for rates as a similar set of PMIs published by the Institute for Supply Management (ISM), but we have to wait until next week for the latter.  The first mover advantage of today’s data helped drive the reaction.  Thankfully, it was good for rates with the average lender moving down to the lowest levels since Friday, April 12th.

Existing home sales posted strong gains in February while sales of new homes slipped slightly. In March each category switched directions. The U.S. Census Bureau and the Department of Housing and Urban Development said newly constructed homes sold at a seasonally adjusted annual rate of 693,000 compared to 668,000 in February while the National Association of Realtors® (NAR) reported that existing home sales fell from a rate of 4.38 million units the prior month to 4.19 million. The increase in new home sales put those transactions up 8.8 percent compared to February and 8.3 percent higher than the March 2023 pace. Sales of previously owned single-family homes, townhouses, condos, and cooperative apartments were down 4.3 percent and 3.7 percent compared to the two earlier periods. [newhomesall] Existing single-family home sales also declined 4.3 percent in March to a 3.97-million-unit sales pace while condo and cooperative apartment sales were down 4.9 percent to 390,000 units.  Single-family sales were 2.8 percent and multi-family sales were 11.4 percent lower year-over-year. New home sales rose by 10,000 units from February to 67,000 on a non-seasonally adjusted basis. Analysts polled by Trading Economics had expected new home sales to remain at February’s 668,000 level and had expected a smaller 2.2 percent decline in existing home sales to 4.2 million units. The inventory of new homes remains healthy with 477,000 unsold homes , an estimated 8.3-month supply at the current rate of sales and a monthly increase of 5.7 percent. The number of existing homes available for sale did increase by 4.7 percent to 1.11 million units but remains anemic at a 3.2-month supply.

Is it any surprise to see a strong reaction to economic data when the phrase “data dependent” has come to unequivocally rule all other approaches to understanding the interest rate outlook?  Yes, actually, it can sometimes still be a surprise because data dependency depends on the data being depended upon. In today’s case, we have a report that has been inconsequential more often than not over the past decade, but increasingly relevant in the last 2 years.  There could be some debate as to whether that’s due to the gradual increase of acceptance for S&P’s PMI data in a country where ISM has long been the dominant source of PMI data or whether it’s simply due to the bond market’s strong desire for econ data. Either way, it’s a market mover today.

The reaction is so blatantly obvious that it begs the question as to how the underlaying data justifies the move.  After all, there wasn’t a huge departure in Indices themselves.  We’ll focus on the services side of the economy here, just to keep the chart simple, but the takeaway from Manufacturing is no different.

Broader context is helpful.  Today’s move in yields is well within the weekly range and not-at-all meaningful in the bigger picture.  In other words, it becomes less impressive the more we zoom out.

“The next time you dislike your life, remember it’s all about perspective. I know someone who reads 2-3 books a week, works out twice a day, has no financial worries, and has people who want to have sex with him all the time. Yet he constantly complains how much he hates prison.” Being “locked up” with a 3 percent loan on a home is misleading and is certainly not imprisonment. In fact, people are indeed selling. “’We can’t just let our kids grow up while the Fed figures out what they think about inflation,’ said Luke Bolton, who listed his home in March and expects to close soon on a purchase.” Perhaps the “lock in effect” is ebbing ahead of the summer purchase season. Some of it is geographical… Midlife crises are alive and well, as Miami is officially the city in which Gen Xers made up the largest share of potential homebuyers. (I don’t know how a generation moved down to only being 14 years, but Gen X are those born from the mid-1960s to the late 1970s.) Lenders are coming up with creative solutions of home affordability issues, like LoanSense. Or 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. Today’s has an interview with influencer Ally Carty on carving a path in mortgage as a young person in the industry. Lender and Broker Products, Software, and Services