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Real Estate Newsletter Articles this Week

2 days ago

At the Calculated Risk Real Estate Newsletter this week: • Rents Still Increasing Sharply Rent increases slowing seasonally• Real House Prices, Price-to-Rent Ratio and Price-to-Median Income in September And a look at "Affordability"• Conforming Loan Limit Increases to $647,200 High-Cost Areas increase to $970,800• Case-Shiller National Index up 19.5% Year-over-year in September Index for Conforming Loan Limit Increases 18.04% YoY• 2022 Housing Forecasts: Second Look Optimism on New Home Sales in 2022This is usually published several times a week, and provides more in-depth analysis of the housing market.The blog will continue as always!You can subscribe at https://calculatedrisk.substack.com/  Currently all content is available for free – and some will always be free – but please

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Schedule for Week of December 3, 2021

2 days ago

The key economic reports this week are November CPI and the October trade deficit.—– Monday, December 6th —–No major economic releases scheduled.—– Tuesday, December 7th —–8:30 AM: Trade Balance report for October from the Census Bureau. This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.The consensus is the trade deficit to be $67.0 billion.  The U.S. trade deficit was at $80.9 billion in September.8:00 AM: Corelogic House Price index for October.—– Wednesday, December 8th —–7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase

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December 3rd COVID-19: Cases, Hospitalizations and Deaths Increasing

3 days ago

The CDC is the source for all data.According to the CDC, on Vaccinations.  Total doses administered: 466,348,132.COVID Metrics  TodayWeekAgoGoal Percent fully Vaccinated59.7%—≥70.0%1 Fully Vaccinated (millions)198.2—≥2321 New Cases per Day3🚩96,42587,986≤5,0002 Hospitalized3🚩48,61044,689≤3,0002 Deaths per Day3🚩975893≤502 1 Minimum to achieve "herd immunity" (estimated between 70% and 85%).2my goals to stop daily posts,37-day average for Cases, Currently Hospitalized, and Deaths🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met. IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  Note: COVID will probably stay endemic (at least for some time).KUDOS to the

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Black Knight: Number of Mortgages in Forbearance "Drops Below the Million Mark"

3 days ago

This data is as of November 30th.From Andy Walden at Black Knight: Forbearance Plan Total Drops Below the Million MarkDaily tracking data through December 1 shows the number of active forbearance plan totals dropping below 1 million for the first time since the start of the pandemic.According to our McDash Flash daily forbearance tracking dataset, the number of active forbearance plans fell by 23,000 (-2.3%) this week, led by a 14,000 (-3.9%) drop in FHA/VA loans. Both GSE (-7K/-2%) and PLS/portfolio (-2K/-.6%) plan volumes also improved.As of November 30, 994,000 mortgage holders (1.9%) remain in COVID-19 related forbearance plans, including 1.1% of GSE, 2.9% of FHA/VA and 2.5% of portfolio held and privately securitized loans. Click on graph for larger image. Overall, the number of

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AAR: November Rail Carloads Down Compared to 2019; Intermodal Up Slightly

3 days ago

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission. U.S. railroads originated 917,787 total carloads in November 2021, up 2.0% over November 2020 and down 3.9% from November 2019. The 2.0% gain in November was the ninth straight gain, but it was also the smallest percentage gain in those nine months….U.S. railroads originated 1.03 million intermodal containers and trailers in November, down 9.6% from November 2020 and up 0.8% over November 2019. November 2021 was the fourth straight month in which intermodal volume fell, and the 9.6% decline was the biggest decline in those four months. In 2021, September, October, and November were all in the bottom half of months in terms of intermodal volume, something that has

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Comments on November Employment Report

3 days ago

The headline jobs number in the November employment report was below expectations, however, employment for the previous two months was revised up by 82,000.   The participation rate and employment-population ratio both increased, and the unemployment rate decreased to 4.2%.Leisure and hospitality gained 23 thousand jobs in November.  In March and April of 2020, leisure and hospitality lost 8.22 million jobs, and are now down 1.33 million jobs since February 2020.  So, leisure and hospitality has now added back about 84% all of the jobs lost in March and April 2020.Construction employment increased 31 thousand, and manufacturing also added 31 thousand jobs.State and Local education lost 16 thousand jobs, seasonally adjusted.  This accounted for over half of the 25 thousand public sector

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November Employment Report: 210 thousand Jobs, 4.2% Unemployment Rate

3 days ago

From the BLS: Total nonfarm payroll employment rose by 210,000 in November, and the unemployment rate fell by 0.4 percentage point to 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in professional and business services, transportation and warehousing, construction, and manufacturing. Employment in retail trade declined over the month….The change in total nonfarm payroll employment for September was revised up by 67,000, from +312,000 to +379,000, and the change for October was revised up by 15,000, from +531,000 to +546,000. With these revisions, employment in September and October combined is 82,000 higher than previously reported.emphasis added Click on graph for larger image.The first graph shows the year-over-year change in total non-farm

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Friday: Employment Report

4 days ago

My November Employment PreviewGoldman November Payrolls PreviewFriday:• At 8:30 AM ET, Employment Report for November.   The consensus is for 563 thousand jobs added, and for the unemployment rate to decrease to 4.5%.• At 10:00 AM, the ISM Services Index for November.

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December 2nd COVID-19: Hospitalizations Increasing

4 days ago

The CDC is the source for all data.According to the CDC, on Vaccinations.  Total doses administered: 464,445,580.COVID Metrics  TodayWeekAgoGoal Percent fully Vaccinated59.6%—≥70.0%1 Fully Vaccinated (millions)197.8—≥2321 New Cases per Day386,41294,393≤5,0002 Hospitalized3🚩47,71444,556≤3,0002 Deaths per Day3859983≤502 1 Minimum to achieve "herd immunity" (estimated between 70% and 85%).2my goals to stop daily posts,37-day average for Cases, Currently Hospitalized, and Deaths🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met. IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  Note: COVID will probably stay endemic (at least for some time).KUDOS to the

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Goldman November Payrolls Preview

4 days ago

A few brief excerpts from a note by Goldman Sachs economist Spencer Hill:We estimate nonfarm payrolls rose 575k in November … Big Data employment indicators were mixed in the month, and we also see some chance that labor supply constraints weighed on pre-holiday hiring in the retail industry. … We estimate a one-tenth drop in the unemployment rate to 4.5%, reflecting a strong household employment gain but a likely rebound in the labor force participation rateemphasis addedCR Note: The consensus is for 563 thousand jobs added, and for the unemployment rate to decrease to 4.5%.

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Rents Still Increasing Sharply

4 days ago

Today, in the Real Estate Newsletter: Rents Still Increasing Sharply Rent increases slowing seasonallyExcerpt: The Zillow measure is up 11.2% YoY in October, up from 10.3% YoY in September. And the ApartmentList measure is up 17.7% as of November, up from 16.9% in October. Both the Zillow measure (a repeat rent index), and ApartmentList are showing a sharp increase in rents. …Clearly rents are increasing sharply, and we should expect this to spill over into measures of inflation in 2022. The Owners’ Equivalent Rent (OER) was up 3.1% YoY in October, from 2.9% in September – and will increase further in the coming months.

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November Employment Preview

4 days ago

On Friday at 8:30 AM ET, the BLS will release the employment report for November. The consensus is for 563 thousand jobs added, and for the unemployment rate to decrease to 4.5%.There were 531 thousand jobs added in October, and the unemployment rate was at 4.6%.Click on graph for larger image.• First, currently there are still about 4.2 million fewer jobs than in February 2020 (before the pandemic).This graph shows the job losses from the start of the employment recession, in percentage terms.The current employment recession was by far the worst recession since WWII in percentage terms.  However, the current employment recession, 20 months after the onset, is now significantly better than the worst of the "Great Recession".• ADP Report: The ADP employment report showed a gain of 534,000

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Hotels: Occupancy Rate Up 5% Compared to Same Week in 2019; Record Thanksgiving Week Occupancy

4 days ago

Note: Since occupancy declined sharply at the onset of the pandemic, CoStar is comparing to 2019.From CoStar: STR: Thanksgiving Boosts US Weekly Hotel PerformanceU.S. hotel performance came in higher than any other Thanksgiving week on record, according to STR‘s latest data through November 27.November 21-27, 2021 (percentage change from comparable week in 2019*):• Occupancy: 53.0% (+4.6%)• Average daily rate (ADR): $128.41 (+14.3%)• Revenue per available room (RevPAR): $68.00 (+19.6%)*Due to the steep, pandemic-driven performance declines of 2020, STR is measuring recovery against comparable time periods from 2019. emphasis addedThe following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.Click on graph for larger image.The red line is for

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Weekly Initial Unemployment Claims Increase to 222,000

4 days ago

The DOL reported:In the week ending November 27, the advance figure for seasonally adjusted initial claims was 222,000, an increase of 28,000 from the previous week’s revised level. The previous week’s level was revised down by 5,000 from 199,000 to 194,000. The 4-week moving average was 238,750, a decrease of 12,250 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week’s average was revised down by 1,250 from 252,250 to 251,000emphasis addedThe following graph shows the 4-week moving average of weekly claims since 1971.Click on graph for larger image.The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 238,750.The previous

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November Vehicles Sales decreased to 12.9 million SAAR

5 days ago

Wards Auto released their estimate of light vehicle sales for November. Wards Auto estimates sales of 12.86 million SAAR in November 2021 (Seasonally Adjusted Annual Rate), down 1.0% from the October sales rate, and down 19.0% from November 2020. This was below the consensus estimate of 13.2 million SAAR.Click on graph for larger image.This graph shows light vehicle sales since 2006 from the BEA (blue) and Wards Auto’s estimate for November (red).The impact of COVID-19 was significant, and April 2020 was the worst month.After April 2020, sales increased, and were close to sales in 2019 (the year before the pandemic).  However, sales decreased earlier this year due to supply issues. It appears the "supply chain bottom" was in September, but sales in November were disappointing.

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December 1st COVID-19: Holiday Impacted Data

5 days ago

The CDC is the source for all data.According to the CDC, on Vaccinations.  Total doses administered: 462,263,845.COVID Metrics  TodayWeekAgoGoal Percent fully Vaccinated59.4%—≥70.0%1 Fully Vaccinated (millions)197.4—≥2321 New Cases per Day382,84694,368≤5,0002 Hospitalized3🚩47,00444,061≤3,0002 Deaths per Day3816990≤502 1 Minimum to achieve "herd immunity" (estimated between 70% and 85%).2my goals to stop daily posts,37-day average for Cases, Currently Hospitalized, and Deaths🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met. IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  Note: COVID will probably stay endemic (at least for some time).KUDOS to the

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Fed’s Beige Book: "Economic activity grew at a modest to moderate pace"

5 days ago

Fed’s Beige Book "This report was prepared at the Federal Reserve Bank of Chicago based on information collected on or before November 19, 2021."Economic activity grew at a modest to moderate pace in most Federal Reserve Districts during October and early November. Several Districts noted that despite strong demand, growth was constrained by supply chain disruptions and labor shortages. Consumer spending increased modestly; low inventories held back sales of some items, notably light vehicles. Leisure and hospitality activity picked up in most Districts as the spread of the Delta variant ebbed in many areas. Construction activity generally increased but was held back by scarce materials and labor. Nonresidential real estate activity increased widely, while residential real estate activity

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Real House Prices, Price-to-Rent Ratio and Affordability in September

5 days ago

Today, in the Real Estate Newsletter: Real House Prices, Price-to-Rent Ratio and Price-to-Median Income in September; And a look at "Affordability"Excerpt (there is much more): In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners’ Equivalent Rent (OER) from the BLS.Here is a similar graph using the Case-Shiller National and Composite 20 House Price Indexes. This graph shows the price to rent ratio (January 2000 = 1.0). The price-to-rent ratio had been moving more sideways but picked up significantly recently.On a price-to-rent basis, the Case-Shiller National index is back to January 2006 levels,

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Construction Spending Increased 0.2% in October

5 days ago

From the Census Bureau reported that overall construction spending increased 0.2%:Construction spending during October 2021 was estimated at a seasonally adjusted annual rate of $1,598.0 billion, 0.2 percent above the revised September estimate of $1,594.8 billion. The October figure is 8.6 percent above the October 2020 estimate of $1,471.7 billion.emphasis addedPrivate spending decreased and public spending increased:Spending on private construction was at a seasonally adjusted annual rate of $1,245.0 billion, 0.2 percent below the revised September estimate of $1,247.9 billion….In October, the estimated seasonally adjusted annual rate of public construction spending was $353.0 billion, 1.8 percent above the revised September estimate of $346.8 billion. Click on graph for larger

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ISM® Manufacturing index increased to 61.1% in November

5 days ago

(Posted with permission). The ISM manufacturing index indicated expansion in November. The PMI® was at 61.1% in November, down from 60.8% in October. The employment index was at 53.3%, up from 52.0% last month, and the new orders index was at 61.5%, up from 59.8%.From ISM: Manufacturing PMI® at 61.1% November 2021 Manufacturing ISM® Report On Business®Economic activity in the manufacturing sector grew in November, with the overall economy achieving an 18th consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:“The November Manufacturing PMI® registered 61.1 percent, an

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ADP: Private Employment increased 534,000 in November

5 days ago

From ADP:Private sector employment increased by 534,000 jobs from October to November according to the November ADP® National Employment ReportTM. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by the ADP Research Institute® in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual data of those who are on a company’s payroll, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis“The labor market recovery continued to power through its challenges last month,” said Nela Richardson, chief economist, ADP. “November’s job gains bring the three month average to 543,000 monthly jobs added, a modest uptick from the job pace earlier this year. Job gains

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MBA: Mortgage Applications Decrease in Latest Weekly Survey

5 days ago

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly SurveyMortgage applications decreased 7.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 26, 2021. This week’s results include an adjustment for the Thanksgiving holiday…. The Refinance Index decreased 15 percent from the previous week and was 41 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index decreased 30 percent compared with the previous week and was 8 percent lower than the same week one year ago. “Mortgage rates rose for the third week in a row, reducing the refinance incentive for many

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Wednesday: ADP Employment, ISM Manufacturing, Construction Spending, Beige Book, Vehicle Sales

6 days ago

Wednesday:• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.• At 8:15 AM, The ADP Employment Report for November. This report is for private payrolls only (no government).  The consensus is for 525,000 jobs added, down from 571,000 in October. • At 10:00 AM, ISM Manufacturing Index for November.  The consensus is for 61.0%, up from 60.8%.• Also at 10:00 AM, Construction Spending for October.  The consensus is for 0.4% increase in spending.• At 2:00 PM, the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts. • All day, Light vehicle sales for November. The consensus is for 13.2 million SAAR in November, up from the BEA estimate of 13.0

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November 30th COVID-19: Holiday Impacted Data

6 days ago

The CDC is the source for all data.According to the CDC, on Vaccinations.  Total doses administered: 460,773,508.COVID Metrics  TodayWeekAgoGoal Percent fully Vaccinated59.4%—≥70.0%1 Fully Vaccinated (millions)197.1—≥2321 New Cases per Day380,17893,674≤5,0002 Hospitalized341,44242,596≤3,0002 Deaths per Day3804977≤502 1 Minimum to achieve "herd immunity" (estimated between 70% and 85%).2my goals to stop daily posts,37-day average for Cases, Currently Hospitalized, and Deaths🚩 Increasing 7-day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met. IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  Note: COVID will probably stay endemic (at least for some time).KUDOS to the

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Fannie Mae: Mortgage Serious Delinquency Rate Decreased in October

6 days ago

Fannie Mae reported that the Single-Family Serious Delinquency decreased to 1.46% in October, from 1.62% in September. The serious delinquency rate is down from 3.05% in October 2020.These are mortgage loans that are "three monthly payments or more past due or in foreclosure".The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59% following the housing bubble, and peaked at 3.32% in August 2020 during the pandemic.Click on graph for larger imageBy vintage, for loans made in 2004 or earlier (1% of portfolio), 4.02% are seriously delinquent (down from 4.25% in September). For loans made in 2005 through 2008 (2% of portfolio), 6.90% are seriously delinquent (down from 7.21%), For recent loans, originated in 2009 through 2021 (97% of portfolio), 1.17% are seriously

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Las Vegas Visitor Authority for October: Visitor Traffic Down 7.6% Compared to 2019

6 days ago

From the Las Vegas Visitor Authority: October 2021 Las Vegas Visitor StatisticsWith significant events and an improving convention segment, October saw the strongest visitation of the pandemic era both on weekends and midweek as the destination welcomed nearly 3.4M visitors (up 15.5% MoM and down ‐7.6% from Oct 2019).Hotel occupancy reached 81.6% for the month (up 8.6 pts MoM, down ‐8.4 pts vs. Oct 2019), as Weekend occupancy reached 90.4% (up 1.3 pts MoM) while Midweek occupancy improved from the prior month to 77.5% (up 11.4 pts MoM).October room rates approached $174, significantly ahead of last month and Oct 2019 (up 11.5% MoM and up 28.3% vs. Oct 2019) while RevPAR neared $142, up 24.6% MoM and 16.4% ahead of Oct 2019. Click on graph for larger image. Thist graph shows visitor traffic

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FDIC: Problem Banks Declined, Residential REO Declined in Q3

6 days ago

The FDIC released the Quarterly Banking Profile for Q3 2021 this morning: Quarterly net income rose $18.4 billion (35.9 percent) to $69.5 billion from the same period one year ago….Total assets increased $462.6 billion (2 percent) from second quarter 2021 to $23.3 trillion. Securities rose $225 billion (3.9 percent), while cash and balances due from depository institutions rose $126.8 billion (3.6 percent). Growth in mortgage-backed securities (up $101.9 billion, or 3 percent) and U.S. Treasury securities (up $99.3 billion, or 8.5 percent) continued to drive quarterly increases in total securities. Loans and securities with maturities longer than 5 years now make up almost a third (31.3 percent) of total assets, up from 28 percent in fourth quarter 2019. Loans that were 90 days or

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More on Case-Shiller and FHFA House Price Increases

6 days ago

Today, in the Newsletter: Case-Shiller National Index up 19.5% Year-over-year in SeptemberExcerpt: Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for September were released today. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).The MoM increase in Case-Shiller was at 1.18%; still historically high, but lower than the previous 13 months. House prices started increasing sharply in the Case-Shiller index in August 2020, so the last 14 months have all been historically very strong, but the peak MoM growth is behind us – and the year-over-price growth is starting to decelerate….As I discussed in How Much will the Fannie & Freddie Conforming Loan Limit Increase for 2022?, the FHFA

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Case-Shiller: National House Price Index increased 19.5% year-over-year in September

6 days ago

S&P/Case-Shiller released the monthly Home Price Indices for September ("September" is a 3-month average of July, August and September prices).This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.From S&P: S&P Corelogic Case-Shiller Index Reports 19.5% Annual Home Price Gain in September The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 19.5% annual gain in September, down from 19.8% in the previous month. The 10-City Composite annual increase came in at 17.8%, down from 18.6% in the previous month. The 20- City Composite posted a 19.1% year-over-year gain, down from 19.6% in the previous month. Phoenix, Tampa, and Miami reported the

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Tuesday: Case-Shiller House Prices, FHFA Conforming Loan Limits, Fed Chair Powell Testimony and More

7 days ago

From Matthew Graham at Mortgage News Daily: MBS RECAP: Bonds Find Footing After Shaky StartThis morning we found ourselves in the uncomfortable position of watching the bond market backtrack on massive gains at the end of the previous week. This is always a risk when the market goes on a big run–especially on a Friday. But rather than continue to erase Friday’s gains, bonds found their footing in the 10am hour as a part of a broader "risk-off" move. [30 year fixed 3.21%]emphasis addedTuesday:• At 9:00 AM ET, FHFA House Price Index for September. This was originally a GSE only repeat sales, however there is also an expanded index. The 2022 Conforming loan limits will also be announced. • At 9:00 AM, S&P/Case-Shiller House Price Index for September. The consensus is for a 19.3%

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