Good Wednesday AM,

The news today again was extremely bond friendly, although housing starts typically do not really move the market.

The bond market is reacting positively with the 10-yr down to 3.75%. This is a big line in the sand and is the 50-day moving average. If we can close here or below, we can bring in the next Fibonacci level of 3.67%. That new level along with this week’s gains will drop rates another .125%. The question is when that next move will happen? I would like to see it this week in anticipation of the Fed, but traders also well remember the last Fed meeting where Mr. Powell blew the doors off the bus by unexpectedly talking about two more hikes. This is likely one meeting where the professional traders wait out the news and not jump in on the rumor. Let’s take it day by day at the moment. Still floating right now but that can change.

In the first half of the year, only 14 out of every 1,000 homes in the country were sold, according to a report from Redfin.

That’s equivalent to about 1 percent of the nation’s housing stock, the lowest turnover rate in at least a decade. U.S. new-home sales in May though rose to their highest level since early 2022 despite elevated mortgage rates. The reason: American homeowners have been reluctant to sell because they can’t afford to give up the low mortgage rates they have now. Only 1.08 million existing homes were for sale or under contract at the end of May, the lowest level for that month in National Association of Realtors data going back to 1999. For many would-be buyers, new construction has become the only game in town.

Newly built homes accounted for nearly one-third of single-family homes for sale nationwide in May, compared with a historical norm of 10% to 20%. Existing-home sales in May fell 20% year-over-year, while new single-family home sales that month rose 20% on an annual basis.

Please remain safe and stay healthy, make today great!