Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

From The King Report last evening:

Yesterday’s banter also hailed the new home sales report for its greater than expected sales. At least a few accounts noted that sharply rising interest rates forced people to buy. The average 30-year mortgage rate fell to 5.45% in March from Feb’s 5.63%. The 5.45% was the lowest average rate since June’s 5.23%. Last week the figure hit 5.94%.

Not to be the usual spoil sport, but the details of the report went largely unreported. The median price of new homes fell to $201,400 from $210,000 in February. And that’s with record sales?!?! It confirms our warning that housing starts are almost twice as much as sales; and that portends a huge overhang of homes, especially this late in an extended cycle. Though the supply of new homes fell to 3.7 months, the housing start number shows an enormous amount of new homes in the pipeline.

The report states that new home prices rose 8.8% in the last year. But that’s not accounted for in CPI…Few noticed the 35k downward revision for February new home sales.

But what about the future, especially with rates rising? The Mortgage Bankers Assn refinancing index crashed 30.7% last week, the biggest drop since the June bond debacle. New loan requests fell 9.5%.

Weyerhaeuser reported wonderful Q1 earnings due to surging prices for its lumber and structural panels. However, Weyerhaeuser said it is experiencing transportation problems that make it "increasingly challenging to meet customer needs." Bottlenecks are plaguing parts of the US and much of China.