Wall Street is weighing in on the possible fate of home loan giants Fannie Mae and Freddie Mac, after a fleeting suggestion by Treasury Secretary Scott Bessent earlier this week that the government’s stakes could eventually become part of the proposed US sovereign wealth fund.

Effective March 18, the department is retracting eligibility for non-citizens, it announced.

Over 100,000 loans for first-time home buyers have been pooled and securitized in issuances this year, the guarantor of government-backed loans said.

While ending mandated consumer rights, lenders can still ask for a reconsideration of value on FHA loans; plus, fair lending laws still apply in these cases.

The Federal Reserve governor voted against the decision to slow the pace of balance sheet reduction earlier this week, preferring to allow the current pace of reduction.

These mortgages held by low credit score borrowers, made up 90% of the rise in the number of loans 30 days or more late on payments, ICE Mortgage Tech said.

As is the case with a majority of housing and mortgage market data these days, the Existing Home Sales data from NAR is heavily dependent on context. To be sure, the headline is true. You’d have to go back to report that came out in February, 2024 to see a higher annual pace of sales. (NOTE: the table above contains initially-reported numbers.  NAR subsequently revised  the 3/31/24 report up to 4.31m) And if you were to chart these values only, the chart would probably look pretty good for the present month, but it would also belie the situation in the trenches.  Home sales certainly aren’t in freefall in the bigger picture, but they’re generally still sideways at long term lows. Realtors credited an uptick in inventory for the uptick in sales. Additional details are available at NAR’s release page here: https://www.nar.realtor/newsroom/existing-home-sales-accelerated-4-2-in-february

Small Scale Weakness Leaves Bigger Picture Unchanged

Bonds began the day in stronger territory after tracing a risk-off move in the overnight session. Much like yesterday, 9:30am brought a momentum reversal, both for stocks and bonds, thus beginning a slow march back into weaker territory. Bonds might have stayed green if not for tariff headlines at noon ET which resulted in a modest nudge for stock prices and bond yields simultaneously (probably… it was so small that it could easily be seen as noise).  Either way, the bigger picture was completely unaffected.  Bonds are sideways near their strongest levels in months while they wait for guidance from data on the next big move. 

Econ Data / Events

Jobless Claims

223k vs 224k f’cast, 221k prev

Philly Fed Index

12.5 vs 8.5 f’cast, 18.1 prev

Market Movement Recap

10:30 AM Moderately stronger overnight but giving back gains now.  MBS still up 2 ticks (.06) and 10yr down 0.1bp at 4.23

02:38 PM Lows of the day.  MBS unchanged and 10yr yields up 2.1bps at 4.252

04:40 PM Very flat since last update.  MBS down 1 tick (.03) and 10yr up 1.9bps at 4.25

The National Association of Homebuilders/Wells Fargo Housing Market Index (aka “builder confidence”) hasn’t been in a purgatory of sorts, ever since the big interest rate spike in the 2nd half of 2022.  Builders aren’t nearly as downbeat as they were during the Great Financial Crisis years, but nowhere remotely as confident as the during the post-pandemic highs. The index has now spent more than 2 years muddling sideways in an increasingly narrow range.  The latest reading, reported this week, was worse than economists were expecting, largely due to a bigger decrease in buyer traffic. Even so, the headline confidence level remains in the same consolidation pattern (marked by the arrows in the following chart). Other details from this month’s survey noted by the NAHB:
Builders say tariffs should increase the cost of the typical home by $9200.
Policy uncertainty is contributing to indecision, both on the part of buyers and developers.
29% of builders cut prices in March, up from 26% in February.
The prospect of regulatory relief has helped offset the negative implications from new fiscal policies to some extent.

The Census Bureau released its New Residential Construction report this week, frequently referred to by its principal component “housing starts” (a term for the start of the first phase of new home construction, aka “breaking ground”). In addition to housing starts, the data also logs building permits as well as completions. As we often note, building permits are more even-keeled while housing starts and completions can experience much more month-to-month volatility.  February was the latest example of that as permits came in right in line with forecasts while housing starts surged higher. Single family homes accounted for the vast majority of the improvement, rising to their highest levels in a year, and close to the highest levels since early 2022. There’s often quite a bit of variation across geographies in housing starts. This time around, 2 regions did most of the heavy lifting with the Northeast surging 75% from last month, bringing the annual pace for single family homes up to 84k from 48k. The South only posted a 19.6% gain, but because it’s a much larger housing market, that resulted in an annual pace increase of more than 100k units. In contrast, the Midwest slid backward by 34k units, or about 25% from last month’s annual pace.   The West was the most uneventful region, with a modest 1.8% increase, or 5k units in terms of annual pace. The full text and tables of the release are available at the Census Bureau’s site, here: https://www.census.gov/construction/nrc/pdf/newresconst.pdf