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  • Mortgage rates fall to lowest in nine months

    • 30-year fixed-rate mortgage averages 4.45% for the week ending Jan. 10, down six basis points from the previous week, according to Freddie Mac's Primary Mortgage Survey.
    • "Lower mortgage rates combined with continued income growth and lower energy prices are all positive indicators for consumers that should lead to a firming of home sales,” says Freddie Mac chief economist Sam Khater.
    • A year ago, the 30-year FRM rate was 3.99%.
    • 15-year FRM averages 3.89% vs. 3.99% in the previous week and 3.44% a year ago.
    • 5-year Treasury-indexed hybrid adjustable-rate mortgage averages 3.83%, down from 3.98% in the prior week; compares with 3.46% a year ago.
    • Previously: Mortgage applications rise as rates ease (Jan. 9)
    • ETFs: MORL, REM, XHB, ITB, MORT, DMO, PKB, TSI, PGZ, JLS, NAIL, CMBS, FMY, HOML, JMT, LMBS, MBSD
  • How the government shutdown is affecting the real-estate market

    • The partial federal government shutdown is starting to cut into the real-estate market, according to a survey by the National Association of Realtors.
    • About 11% of the association's members report an impact on current clients and another 11% are experiencing an impact on potential clients.
    • Still, about 75% of agents reported no impact.
    • Of those agents affected, 25% said they were impacted when a buyer--not a federal government employee--decided against buying; 9% of agents said they were affected by a federal government employee not buying.
    • Other factors affecting the housing market: closing delays due to a USDA loan, IRS income verification, and FHA loan snags.
    • Previously: Lennar defers FY2019 guidance due to softness, uncertainty (Jan. 9)
    • ETFs: XHB, ITB, PKB, NAIL, HOML, CLAW
  • CoreLogic projects home prices rising 4.8% Y/Y in November 2019

    • CoreLogic Home Price Index Forecast indicates home prices gaining 4.8% on Y/Y basis in November 2019.
    • Projects 0.8% decline to December 2018 from the previous month.
    • November 2018 Home Price Index increased by 5.1% Y/Y, and by 0.4% M/M.
    • “The rise in mortgage rates has dampened buyer demand and slowed home-price growth,” said Dr. Frank Nothaft, chief economist for CoreLogic. 
    • Previously: S&P Corelogic Case-Shiller HPI rises in-line with forecast (Dec. 26, 2018)
    • ETFs: XHB, ITB, PKB, NAIL, HOML
  • Homebuilder stocks gain as voices call for Fed to halt hikes

  • Fannie Mae sees mortgage rates, home sales stabilizing in 2019

    • Fannie Mae's Economic and Strategic Research Group expects mortgage rates and home sales stabilizing in 2019 as the economy slows.
    • Sees full-year GDP growth of 2.3% vs. a projected 3.1% in 2018.
    • Business fixed investment growth slowed significantly in Q3 2018 and may be weighed down by higher tariffs, trade uncertainty, and rising interest rates and input costs, the ESR Group's outlook says.
    • Sees one more Fed hike in December and two more in 2019.
    • "If mortgage rates trend sideways next year, as we anticipate, and home price appreciation continues to moderate, improving affordability should breathe some life into the housing market," says Fannie Mae Chief Economist Doug Duncan.
    • Also sees residential fixed investment resuming "a positive growth trajectory."
    • Previously: Mortgage lender profit outlook falls for nine straight quarters: Fannie Mae (Dec. 12)
    • ETFs: MORL, REM, XHB, ITB, MORT, PKB, NAIL, HOML,
  • Home Purchasing Sentiment Index gains half a point in November

    • Fannie Mae November Home Purchasing Sentiment Index  creeps up 0.5 points to 86.2, as survey participants' household incomes gained offsetting potential cooling factors in the housing market.
    • "Consumers' perceptions of growth in their household income reached a survey high this month, helping to absorb some of the impact of increasing mortgage rates on housing market activity," says Fannie Mae Chief Economist Doug Duncan.
    • iShares U.S. Home Construction ETF (BATS:ITB) jumps 1.4%.
    • The net share of those who say their household income is significantly higher than it was a year ago rose 5 percentage points M/M to a survey high of 24%.
    • Net share of Americans who say it's a good time to buy a home rose 2 pp to 23%.
    • The net share of those who say home prices will go up fell by 4 pp to 33%, down for the second straight month.
    • Among individual stocks: Hovnanian Enterprises (HOV +3.4%), Lennar (LEN +2.7%), William Lyon Homes (WLH +2.5%), Beazer Homes (BZH +1.3%),  KB Homes (KBH +2.6%), PulteGroup (PHM +1.1%).
    • Previously: Homebuilders, timber REITs gain as mortgage rates slip (Dec. 6)
    • ETFs: XHB, ITB, PKB, NAIL, HOML, CLAW
  • Homebuilders a buy on seasonality - Fundstrat

    • The homebuilders have been relentlessly sold, but Fundstrat's Thomas Lee says the sector has entered its "Golden" period. Going back to 1999, he finds the names have posted an average 18.3 advance between October 20 and April 30 - topping the S&P 500 by a whopping 1,290 basis points.
    • Source: Bloomberg
    • It kind of makes sense, as this incorporates the spring selling season, and - as anyone who's ever dealt with a realtor knows - it's always a great spring to buy.
    • ETFs: XHB, ITB, PKB, NAIL, HOML, CLAW
  • U.S. mortgage rates slip W/W: Freddie Mac

    • 30-year fixed-rate mortgage averaged 4.83% for the week ending Nov. 1, 2018, off from 4.86% in the previous week, according to the Primary Mortgage Market Survey.
    • 15-year FRM averaged 4.23% vs. 4.29% W/W.
    • 5-year Treasury-indexed hybrid adjustable-rate mortgage averages 4.04% vs. 4.14%% a week earlier.
    • iShares U.S. Home Construction ETF (BATS:ITB) +3.2%
    • iShares Mortgage Real Estate Capped ETF (BATS:REM-0.4%.
    • Homebuilder ETFs: XHB, ITB, PKB, NAIL, HOML, CLAW
    • Mortgage REIT ETFs: MORL, REM, MORT
  • Homebuilders make strong showing in market upswing

    • With broader markets up strongly today, homebuilder stocks are rising even faster. To be sure, they started at a lower point. iShares U.S. Home Construction ETF (BATS:ITB) has negative return of 32% YTD, while the YTD return on the SPDR S&P 500 Trust ETF (NYSEARCA:SPY) is 0.7%.
    • Thursday afternoon, it's up 3.34%, outpacing SPY's gain of 2.4%.
    • Economic data did its part. September pending home sales unexpectedly rose 0.5%, where consensus expected sales to stagnate.
    • Leading the pack, Meritage Homes (NYSE:MTH), spiking 11% after reporting Q3 results. Also on the rise: KB Home (KBH +6.6%),  Toll Brothers (TOL +5%), PulteGroup (PHM +4.8%), William Lyon Homes (WLH +5%), D.R. Horton (DHI +3.7%), and Lennar (LEN +3.8%).
    • Previously: Meritage Homes +6% post Q3 results (Oct. 25)
    • Previously: Pending Home Sales unexpectedly increase in September (Oct. 25)
    • ETFs: XHB, ITB, PKB, NAIL, HOML
  • Homebuilders go green as markets tumble

    • Leading the rouged-up homebuilders today is Pulte Group (PHM +5.3%), which topped Q3 estimates. New orders were shy of official Street expectations, but - amid growing concerns of a rate-related housing slowdown - probably topped the whisper numbers.
    • Speaking of rates, they're down big today - the 10-year Treasury yield off seven basis points to 3.127%.
    • Toll Brothers (TOL +0.6%), Lennar (LEN +1%), D.R. Horton (DHI +0.4%), LGI Homes (LGIH +2.7%), M/I Homes (MHO +1.9%), KB Home (KBH)
    • ETFs: XHB, ITB, PKB, NAIL, HOML, CLAW
    • Previously: Stocks bushwhacked as Caterpillar, 3M earnings disappoint (Oct. 23)
  • Homebuilders extend decline as existing home inventory creeps up

    • Another day, another disappointing housing report, another day of declines for most homebuilders.
    • iShares U.S. Home Construction ETF falls 1.9% in early afternoon trading, the ETF's one-month return -17%, and -28% YTD.
    • September existing home sales fell 3.4% from August to a seasonally adjusted rate of 5.15M; sales are now down 4.1% from a year ago.
    • Unsold inventory of existing homes, a 4.4-month supply at the current sales pace, has increased from 4.3 months in August and 4.2 months a year ago.
    • Increased supply on the market means more competition for anyone selling a home--new construction or existing.
    • Leading the homebuilders' decline is Beazer Homes (BZH -4.5%), followed by William Lyon Homes (WLH -3.4%), Toll Brothers (TOL -3.6%), D.R. Horton (DHI -3.3%), Lennar (LEN -3%), PulteGroup (PHM -3.1%), and KB Home (KBH -3.3%).
    • Previously: Existing home sales miss estimates (Oct. 19)
    • ETFs: XHB, ITB, PKB, NAIL, HOML
  • Sell-side bailing on homebuilders

    • Credit Suisse this morning downgraded Lennar (NYSE:LEN) and Meritage (NYSE:MTH) to Neutral from Outperform, and KB Home (NYSE:KBH) to Underperform from Neutral. While Q3 may produce earnings beats, says analyst Susan Maklari, slowing demand and worries over affordability will continue to weigh.
    • BTIG's Carl Reichardt says a monthly survey of builders showed decelerating housing demand last summer has continued into the fall. He trims EPS estimates, and cuts price targets for D.R. Horton (NYSE:DHI) and KB Home.
    • Housing starts for September were released minutes ago, and showed a larger-than-expected decline from August. Also released this morning was the latest mortgage application data, and it too showed a slowdown in the face of surging interest rates.
    • Among premarket movers: Toll Brothers (NYSE:TOL-2.4%
    • ETFs: XHB, ITB, PKB, NAIL, HOML, CLAW
  • Weekly market movement wrap

    • See a week over week comparison below for the following indices, equities, commodities, bonds and currencies.
    • Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
    • U.S. Indices
    • Dow -4.2% to 25,339. S&P 500 -4.3% to 2,768. Nasdaq -3.7% to 7,496. Russell 2000 -4.9% to 1,546. CBOE Volatility Index +36% to 21.31.
    • S&P 500 Sectors
    • Energy -4.4%. Materials -6.3%. Industrials -6.2%. Consumer Discretionary -2.9%. Consumer Staples -2.3%. Health Care -3.1%. Financials -5.4%. Information Technology -3.5%. Telecommunication Services -3.1%. Utilities -1.8%. Real Estate -3.6% .
    • World Indices
    • FTSE 100 -3.7% to 6,995. CAC 40 -3.6% to 5,095. DAX -3.9% to 11,523. Nikkei 225 -3.6% to 22,713. Shanghai Composite -5.8% to 2,606. Hang Seng -3.8% to 25,801. BSE Sensex +1.5% to 34,733.
    • Commodities and Bonds
    • Crude Oil WTI -4% to $71.51/bbl. Gold +2.6% to $1221.50/ounce. Natural Gas +0.6% to 3.161s. Treasuries -9 bps to 3.14%
    • Forex and Cryptos
    • EUR/USD +0.45% USD/JPY -0.54% GBP/USD +0.73%. Bitcoin -5.7%. Litecoin -11.4%. Ethereum -14.9%. Ripple -14.3%. Bitcoin Cash -16%.
    • Top Stock Gainers
    • Youngevity (NASDAQ:YGYI) +83%. Cormedix (NYSEMKT:CRMD) +74%. Pyxus (NYSE:PYX) +53%. Avenue Therapeutics (NASDAQ:ATXI) +52%. IDT Corp. (NYSE:IDT) +48%.
    • Top Stock Losers
    • Arbutus Biopharma (NASDAQ:ABUS) -54%. Altimmune (NASDAQ:ALT) -43%. China Internet Nationwide (NASDAQ:CIFS) -41%. China Advanced Construction (NASDAQ:CADC) -38%. Menlo Therapeutics (NASDAQ:MNLO) -36%.
  • U.S. mortgage rates jump to highest level in more than 7 years

    • With 10-year Treasury yields hitting seven-year highs, it's no surprise that mortgage rates are following suit.
    • 30-year fixed-rate mortgage average of 4.90% for the week ending Oct. 11 2018 climbs 19 basis points from the prior week, according to Freddie Mac's (OTCQB:FMCC) Primary Mortgage Market Survey. Last year at this time, the rate was 3.91%
    • "Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand," says Freddie Chief Economist Sam Khater. "While the monthly payment remains affordable due to the still low mortgage rate environment, the primary hurdle for many borrowers today is the down payment and that is the reason home sales have decreased in many high-priced markets."
    • 15-year FRM averaged 4.29% this week vs. 4.15% a  week earlier; year-ago rate was 3.21%
    • 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.07% vs.4.01%. Year-ago rate was 3.16%.
    • Previously: Mortgage rates hold relatively steady: Freddie Mac (Oct. 4)
    • ETFs: MORL, REM, XHB, ITB, MORT, DMO, PKB, TSI, PGZ, JLS, NAIL, CMBS, FMY, HOML, JMT, LMBS, MBSD
  • Homebuilders' decline take a breather

    • Perhaps it's because the bond markets are closed and Treasury yields can't rise further today, but the iShares U.S. Home Construction ETF (ITB +0.5%) breaks its eight-session decline.
    • With mortgage rates rising and indications that the Fed won't stop interest-rate hikes anytime soon, homebuilder stocks have suffered.
    • In the past month ITB is down 6.2%; YTD, -19%.
    • Today, though, there's at least a pause to the downward slope.
    • As for individual homebuilder stocks, D.R. Horton (DHI +0.6%), Lennar (LEN +1.1%), Toll Brothers (TOL +0.8%), William Lyon Homes (WLH +3%), Hovnanian (HOV +2.6%), NVR (NVR +1.8%), among others, are seeing gains.
    • SPDR S&P Homebuilders ETF (XHB -0.3%), though, continues to decline as some of its construction-related product and retail stocks fall, including (LOW -0.6%), (WHR -0.2%),  and (MHK)
    • Previously: Bank stocks gain as Treasuries, homebuilders sink (Oct. 3)
    • ETFs: XHB, ITB, PKB, NAIL, HOML