Why Is the Median Income to Median Home Price Ratio Elevated?
The recent 5.5% year-over-year gain for home prices has put the FHFA House Price Index about 3% above its April 2007 level.
Home prices have eclipsed their April 2007 peak and are now hitting new highs. In March 2016, the FHFA reported that home prices rose 0.7% month-over-month and 5.5% year-over-year.
From March 2015 to March 2016, the Pacific states took the lead with home price appreciation of 9.5%, followed by the Mountain states with a gain of 8.5%.
The ten-year bond yield rose by 14 basis points to 1.84% for the week ending May 20, 2016. Ginnie Mae TBAs fell by 4 ticks. They closed at 105 17/32 and outperformed Fannie Mae TBAs.
For the week ending May 20, 2016, Fannie Mae TBAs ended at 104 19/32—down 10 ticks for the week.
Last week, the ten-year bond yield rose 14 basis points to 1.84%. Mortgage rates rose 6 basis points to 3.64%.
After closing the prior week at 1.7%, bond yields—as tracked by the iShares 20+ Year Treasury Bond ETF (TLT)—rose by 14 basis points to 1.84% last week.
Last week, bond yields rose to 1.84% on the FOMC minutes. Note the Fed has set up the Market for rate hikes several times in the past couple of years only to get cold feet at the last moment.
At the April 2016 meeting, the FOMC decided to continue to reinvest maturing proceeds back into the Treasury and MBS market.
The FOMC staff economists said that financial market conditions have improved further since the March meeting.
At the March 2016 FOMC meeting, the Fed took down its 2016 inflation forecast from 1.6% to 1.2%. The stronger dollar is affecting commodity prices and imports, and that’s keeping a lid on inflation.
According to the April FOMC minutes, the staff believes that GDP growth has begun to decelerate. Industrial production and manufacturing output declined in February and March.
Fed participants noted improvement in the labor market, even as growth in economic activity has slowed. That said, the labor market has some strange numbers.
On May 18, 2016, the Fed released its minutes from the April FOMC meeting. In this series, we’ll take an in-depth look at those minutes and their implications for investors.
The ten-year bond yield, tradable through the iShares 20+ Year Treasury Bond ETF (TLT), fell to 1.7% for the week. Ginnie Mae TBAs rose by 3 ticks.
For the week ending May 13, Fannie Mae TBAs ended at 104 38/32—up 3 ticks for the week. The ten-year bond yield fell by 8 basis points to 1.7%.
Lately, mortgage rates and bond yields have been weakly correlated. Treasury yields fell over the past month and mortgage rates have been steady.
After closing out the prior week at 1.8%, bond yields—as tracked by the iShares 20+ Year Treasury Bond ETF (TLT)—fell by 8 basis points to 1.70%.
Last week ended on May 13. It was dominated by retail sales data. Retailers’ earnings have been downright lousy. Big stores had earnings misses.
There’s a lot of housing-related data this week with the NAHB Housing Market Index, housing starts, and building permits.