Number progressions can be deceiving and surprising. Thank you to Eric D. who reminded me of “The Wheat and the Chessboard” example, guaranteed to surprise anyone. What is also surprising is that between 2022 and 2023, the Hispanic population accounted for nearly 71 percent of the overall growth of the United States population, driven primarily by Hispanic births, according to newly released Vintage 2023 Population Estimates from the U.S. Census Bureau. Hispanics of any race grew to just over 65 million, an increase of 1.16 million (1.8 percent) from the prior year. This growth significantly contributed to the nation’s total population gain of 1.64 million in 2023. The annual increase of 1.8 percent was in sharp contrast to the 0.2 percent increase in the non-Hispanic population, whose growth was tempered by a decline among non-Hispanic Whites, the largest demographic within the non-Hispanic category and the only one to experience a population loss. By the way, we should celebrate our differences… vive la difference: The top racial or ethnic groups for the United States was the “White alone non-Hispanic” population (58%, down from 64% in 2010), “Hispanic or Latino” population (19% of the total population), and then “Black or African American alone non-Hispanic” population was the third-largest group at 12%. (Today’s podcast can be found here and this week’s podcasts are sponsored by Visio Lending. Visio, which has a top-notch broker program, 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. Hear an Interview with Garrett, McAuley & Co.’s Joe Garrett on GSE reform, the CFPB under Trump 2.0, and what it takes to run a profitable mortgage company in this environment.)

The National Association of Home Builders (NAHB) and Wells Fargo publish the Housing Market Index (HMI) each month. The industry refers to this as “builder confidence” and December’s number came out today. It was right in line with November’s, and it suggests builders are increasingly honing in on a relatively gloomy baseline in the bigger picture. There are several ways to approach the languishing of the index, with the easiest being some combination of single family construction (which capture the initial drop in 2022) and multi-family construction (which, along with persistently high rates, helps explain why the index may not have recovered). Both are charted below. Ultimately, actual construction figures are a better indicator of the housing market than sentiment surveys, but the latter can offer some insight to trends and future opportunities.  On that note, the component of the builder survey that tracks the outlook for 6 months into the future continues moving to the highest levels since 2022.  As seen the following chart, it’s less “sideways” and better described as gently trending higher. Other highlights from today’s release:
31% of builders cut prices in December, vs 31% in Nov
Average price reduction was also unchanged at 5%
Sales incentives were used in 60% of transactions, also unchanged from Nov

American Mortgage Network accused CCM of racketeering for running a “transition desk” to divert loans, claims a judge dismissed.

Bonds Hold Ground Despite Unfriendly Econ Data

If there was a prime directive for the bond market last week, it was to sell off regardless of any counterargument from the economic data.  The new week got off to a distinctly different start with stronger economic data only causing a temporary inconvenience for bonds.  Both MBS and Treasuries were pushed back in line with Friday’s weakest level, but both found support in the PM hours before going on to make it back to unchanged territory, or close to it.  Volume was low and the volatility was small in the bigger picture, but at the very least, it was nice to see a different reaction than last week’s default weakness. 

Econ Data / Events

NY Fed Manufacturing

.20 vs 12 f’cast, 31.2 prev

S&P Services PMI

58.5 vs 55.7 f’cast, 56.1 prev

Market Movement Recap

09:46 AM Modestly stronger overnight, but giving up gains in domestic trading.  MBS up 2 ticks and 10yr down less than 1 bp at 4.385

12:15 PM Trying to bounce after hitting weakest levels.  MBS down 1 tick (.03) and 10yr up 0.7bps at 4.399

03:28 PM Off the weakest level.  MBS unchanged and 10yr 0.2bps higher at 4.394

You don’t become cooler with age, but you do care progressively less about being cool, which is the only true way of being cool. This is called the “Geezer’s Paradox.” People change, and so do industries. Things are always changing in our business. For example, take this plethora of mortgage law changes hitting Texas originators and lenders. Although ATR (Ability to Repay) has given us years of strong borrowers, credit analysis is changing. “Rob, is it true that the three credit bureaus own VantageScore?” Yes, it is owned by the three national credit bureaus (Equifax, Experian and TransUnion); VantageScore Solutions, LLC is an independently managed company. (Today’s podcast can be found here and this week’s podcasts are sponsored by Visio Lending. Visio, which has a top-notch broker program, 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. Hear an interview with Fairway Independent’s Steve Jacobson on leading a mortgage company and the individuals that work for it.) Lender and Broker Software, Services, and Products ‘Tis the season of giving, and what better way to celebrate than by treating borrowers’ pets to shiny new tags for their new home? With Operation Fido, tags are automatically ordered directly from Encompass® by ICE Mortgage Technology™ when a loan closes, ensuring furry friends stay safe as they explore their new neighborhoods. It’s a simple, thoughtful way to make borrowers (and their four-legged family members!) feel at home. Watch the video to see how it works!

Bonds were modestly stronger in the overnight session, and although domestic traders quickly erased the gains in the AM hours, the selling is currently stalling out near unchanged levels.  If this support continues, it will build a case for rates leveling off ahead of Wednesday’s Fed announcement (and dot plot).  Notably, bonds looked prepared to hold overnight gains until the S&P Services PMI came out much stronger than expected at 9:45am. If bonds must be weaker, it’s always better to know why (unlike last week).

Last week wasn’t great for mortgage rates.  They moved higher on each of the 5 days.  Moreover, there was a distinct lack of logical motivation from the economic data.  In fact, on a few occasions, the data argued for lower rates only for things to move in the other direction by the end of the day. The new week is off to a different start.  Today’s only relevant economic data argued in favor of higher rates, but the average lender ended the day in slightly lower territory compared to Friday afternoon.  Granted, it wasn’t a big victory, by any means (many lenders are effectively unchanged), but after last week, we’ll take any victory we can get. Volatility risks increase substantially on Wednesday when the Fed releases its next policy announcement.  Out of the 8 Fed meetings per year, 4 of them include an update on each Fed member’s rate projections. These meetings tend to produce bigger reactions in rates and this meeting is one of those 4. As always, volatility can play out for better or worse.  Traders are already assuming the Fed will pencil in a slower pace of rate cuts than they did in the September meeting. Some of the recent rise in rates reflects those trades. The Fed isn’t the only game in town.  There are a few other economic reports that could help or hurt rate momentum, depending on the outcome.  The first of those is tomorrow morning’s Retail Sales report which is released at 8:30am ET.  

PHH Mortgage announced it will be using the San Francisco-based technology company’s Mortgage Suite, including Loan Officer Toolkit and Blend Close.

Gross profit returns fell in a range that could easily be erased on renovation, mortgage and tax charges, Attom said.

Businesses across several industries have already started budgeting for expected price increases