The median monthly payment amount for new purchases moved higher for the first time in six months, according to the Mortgage Bankers Association.

New single-family home sales decreased 17% last month to a 610,000 annualized rate, according to government data issued Tuesday.

No Major Data. No Major Drama

While today’s economic calendar was not necessarily “empty,” it may as well have been in terms of market movement potential.  Home prices came in hotter according to FHFA, but bonds never care about home price indices (apart from the housing meltdown, perhaps). Same story for new home sales which tanked due to Hurricane Milton. Consumer confidence and the 5yr auction were right in line with expectations, thus leaving only the Fed Minutes at 2pm.  The Fed couldn’t possibly have said anything interesting 3 weeks ago that we haven’t already heard several of them say in the past 3 weeks.  Therefore, it was never likely to inspire bond market movement. We’re left with a modest correction to yesterday’s rally and a day of mostly flat trading into the 3pm CME close.  Wednesday could be a bit jumpier depending on the data and month-end trading uncertainty. 

Econ Data / Events

FHFA Home Prices

0.7 vs 0.3 f’cast, 0.4 prev

Case Shiller Home Prices

-0.3 vs -0.3 prev

Annual Case Shiller Prices

4.6 vs 4.8 f’cast, 5.2 prev

Annual FHFA Home Prices

4.4 vs 4.4 prev

New Home Sales

610k vs 730k f’cast

Consumer Confidence

111.7 vs 111.3 f’cast

Market Movement Recap

09:12 AM Bonds drift sideways to slightly weaker overnight.  MBS down only 2 ticks (.06) and 10yr up 2.2 bps at 4.296

10:25 AM Off the AM highs with MBS now down 6 ticks (.19) and 10yr yields up 4.4bps at 4.319

01:03 PM Ho hum 5yr auction. Bonds little changed ad modestly weaker levels.  MBS down 5 ticks (.16) and 10yr up 3.1bps at 4.307

02:05 PM No response to Fed minutes and no change to levels from the last update

The Department of Justice suggested that new buyer broker agreements resulting from a National Association of Realtors settlement may violate antitrust laws.

Government securitization guarantor Ginnie Mae got the terms for the popular HMBS 2.0 program across the finish line ahead of a major change in federal leadership.

The perpetrators conspired to manipulate the short-sale process following the Great Financial Crisis, allowing them to renovate and flip homes for well above the original selling price and leading to millions in losses for lenders and government insurers.

While what they get for their money is important, it was not the leading reason why home buyers decided to relocate, the National Association of Realtors said.

“If he manages to get through the policies that he’s proposing, that will be really bad news,” says Desmond Lachman, an economist at the conservative American Enterprise Institute.

Come For The Big Rally, Stay For The Staying Power

Bonds rallied sharply on Monday.  It wasn’t the first time we’ve seen some decent gains in the past few months, but it was definitely the first time we didn’t need to grease the skids with the highest yields in several months in the previous session.  In other words, it was a rally that arrived after a string of already fairly decent days–the first we’ve seen since September 10th. Credit goes to the announcement of Scott Bessent as Treasury Secretary who’s seen as a more fiscally conservative option–something bonds have been longing for.

Market Movement Recap

08:41 AM Stronger start with most of the gains hitting immediately at the overnight open.  MBS up a quarter point and 10yr down 9bps at 4.318

01:19 PM Gains continue.  MBS up 15 ticks (.47) and 10yr down 12.8bps at 4.279

03:01 PM Steady near best levels.  MBS up half a point and 10yr down 13.8bps at 4.269

Last Monday, mortgage rates were near the highest levels in more than 3 months.  A week later, and the average lender is right in line with the lowest levels in more than a month.  There are two reasons for this, or rather, one reason and one caveat. The caveat is that the range has been fairly narrow since the end of October.  Most of the recent rate spike took place by October 24th, so we didn’t have to traverse much ground to get back to those rates.  Additionally, those rates are still substantially higher than the beginning of October.  The specific reason for today’s improvement is the bond market’s reaction to Trump’s Treasury Secretary appointment.   Bonds dictate rates, and bonds are relieved to see a more fiscally conservative pick. To oversimplify the underlying dynamic, it’s easier for rates to move lower when the Treasury department isn’t issuing debt at a record pace.  That goal is seen as more achievable under Bessent. The average top tier 30yr fixed mortgage rate fell back below 7% with today’s move, but not by much.  This means many borrowers will still be seeing rates in the low 7s, even for top tier scenarios.