Markets

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Markets Wobbling As Fed Normalization Hits $30 Billion Per Month In Q2

The markets were wobbling again this week, but regardless, the Fed normalization will hit $30 billion per month in April. I must confess that I get a good laugh when I hear market apologists and real estate pundits talk up the magnificent economy and housing market we are blessed with in Texas. Yes, things are pretty good here in the Lone Star State, and the DFW housing market still seems to have legs. Unfortunately the real economy is not nearly as robust as many talking heads and sell-side practitioners would have you believe. The March employment [...]

Why Is The Fed Protecting The Stock Market?

The $11 billion increase in the System Open Market Account Holdings report for February 14 has caught the attention of a number of intelligent market watchers for obvious reasons. The Federal Reserve is purportedly in the midst of a significant balance sheet normalization process whereby they are (and plan to to continue) selling large amounts of Treasuries and agency mortgage-backed securities. After amassing a portfolio of over $4.4 trillion, the Fed has used that massive hedge fund to artificially suppress interest rates and foster some serious asset inflation. The Fed was not alone in this [...]

DC’s Fiscal Lunacy, Fed’s Unwind Creating Waves For Housing Market

The fiscal lunacy in Washington and the Federal Reserve's balance sheet unwind are creating waves for the housing market. 2018 was starting off on the right foot with a noticeable, yet moderate rise in bond yields. As we received more concrete evidence that the Federal Reserve was actually unwinding some of that gigantic balance sheet, volatility erupted pretty quickly. After a 12oo point plunge in the Dow, some savvy mortgage borrowers probably took advantage of the temporary fear in the market to score a decent mortgage rate. It was a small window of opportunity, because [...]

Fed Unwinds $21 Billion, Markets Puke On Higher Yields

The Federal Reserve System Open Market Account Holdings (SOMA) report for January 31st finally revealed the balance sheet unwind in action. Since the Fed announced their balance sheet unwind last year, the actual process had been proceeding at a snails pace, particularly with the mortgage-backed securities portfolio. The MBS instruments can take 2-3 months to roll off, so the MBS unwind has been virtually invisible until this week. With a $21 billion drawdown in the latest week, including over $10 billion in agency MBS unwind, it becomes increasingly clear why the markets were puking all [...]

Hovnanian Reports Q1 Results, Announces Exit From “Frothy” San Francisco Market

Hovnanian Enterprieses (HOV) reported 2016 fiscal first quarter results today, posting a 29 percent increase in revenues and a net loss of $16.2 million. That was just part of the story for Hovnanian Enterprises. The more important news is that Hovnanian said it has exited the markets of San Francisco, Minneapolis and Raleigh, with plans to wind down operations in Tampa, FL and the San Francisco Bay area.  As far as actual performance results, Hovnanian's cancellation rate jumped from 18 percent last year to 21 percent in this most recent quarter. Hovnanian reported a 15.3 [...]

Census: New Home Sales Decline 5 Percent YoY In January To 494,000 (SAAR)

The Census new home sales report came in lighter than expected today. New Residential Sales In January 2016 posted at a seasonally adjusted annual rate (SAAR) of 494,000. This was well shy of analysts estimates of 520,000 and 5.2 percent lower than January 2015. The median price of a new home in January 2016 was $278,800, a $13,200 drop from the median price last year. The average price of new home sold (contracted) in January was $365,700, a $9700 increase from the same time a year ago. The pricing mix of new homes in 2016 [...]

By | 2016-02-24T23:19:13+00:00 February 24th, 2016|Development, Markets, Mortgage Rates, New Home Sales, Real Estate|0 Comments

Toll Brothers Reports Fewer Deliveries, Lower Net Income In Q1 2016

Toll Brothers reported fiscal first quarter 2016 earnings this morning, and the results look like more stagnation for the luxury home builder. Deliveries were off 3 percent year-over-year while revenues climbed 9 percent on higher average prices. Toll saw signed contracts rise by 18 percent in the quarter, which is good considering that Toll's community count rose only slightly from 288 last year to 291 this year. What's not good is that both gross margins and income from operations fell during the quarter. Not surprisingly, Toll remains optimistic with their projections for the year. Toll [...]

By | 2017-12-22T02:04:08+00:00 February 23rd, 2016|Development, Economy, Markets, New Home Sales, Real Estate|0 Comments

Mortgage Rates Drop As “Recovery” Drowns In The Sea Of Central Bank Market Manipulations

"Anyone claiming that America's economy is in decline is peddling fiction." Barack Obama - SOTU January 2016 2016 has seen one of the worst starts to a year ever for major U.S. stock indices ever, and that means mortgage rates have continued to fall during the first two weeks of the year. For those who were rushing to lock in a sub-4 percent mortgage, there really was no need to rush. It is now easy to get a 3.75 percent fixed rate 30-year mortgage here in the Houston area. Mortgage rates are driven by demand [...]

By | 2017-02-03T23:27:53+00:00 January 16th, 2016|Economy, Housing Policy, Mortgage Rates, Real Estate, Spin Cycle|0 Comments

KB Home Q4 Earnings Lower Than Expected, Stock Hammered

KB Home reported fourth quarter earnings that were lighter than expected. KB's net income of $44 million in Q4 2015 was lower than analyst estimates, but not a surprise given the margin compression experienced by many home builders recently. KB delivered 2580 homes in the fourth quarter, up 16 percent from a year ago. Average selling prices rose 8 percent to $379,800. KB's numbers for the fourth quarter weren't bad considering the challenging environment and stagnant economy. That being said, investors are likely going to notice that KB's net new orders only grew 10% despite [...]

By | 2016-01-07T14:26:32+00:00 January 7th, 2016|Markets, New Home Sales, Real Estate, Spin Cycle|0 Comments

DR Horton Sees Higher Revenue And Home Orders In Fiscal Q4

D.R. Horton reported 2015 fiscal fourth quarter results this morning, and the Texas-based home builder bucked the trend of weak results from new home builders. D.R. Horton reported a 23 percent increase in closings for the quarter and a 19 percent increase in new orders. The company reported a 44 percent increase in net income for the quarter. Based on the sharp jump in share prices (DHI) today, investors were pleasantly surprised by the results. Even with D.R. Horton's solid results, it appears the average price of new home ordered in the quarter rose by only [...]