Home Prices up 51% from the bottom in 2011

Home prices across the US have grown 51% since they bottomed out in March 2011, with prices in most markets returning to peak levels after dropping 33% during the recession, according to a new report released by CoreLogic.

The increase in home prices is further evidence that the housing market has more than recovered from housing crisis.

CoreLogic said home prices are now 1% higher compared to their peak in 2006. Additionally, year-over-year gains in home equity averaged $14,888 during the third quarter.

“Homeowners in the United States experienced a run-up in prices from the early 2000s to 2006, and then saw the trend reverse with steady declines through 2011,” CoreLogic Chief Economist Frank Nothaft said. “After reaching bottom in 2011, our national price index is up more than 50%. West Coast states, such as California, Washington, and Oregon, are seeing some of the largest trough-to-current growth rates in home prices. Greater demand and lower supply – as well as booming job markets – have given some of the hardest-hit housing markets a boost in home prices. Yet many are still not back to pre-crash levels.”

Source: Core Logic Special Report

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +3 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways for the week.

Overview: We had a choppy session with a net swing of -66 basis points from the best pricing (lowest rates) to our worst pricing (highest rates) but when the smoke cleared - pricing was basically the same at the end of the week as it was at the beginning of the week. While we did get some big name economic reports (ISM/GDP) and Powell's first testimony in front of Congress, it was the Trump Tariff announcement that caused the most volatility.

Trade Wars: President Trump announced tariffs on steel and aluminum imports today which concerns traders that it will spark a trade war which may provide some headwinds to our growing economy. The White House has yet to release the specifics but "next week" he will put forth his plan on 10% aluminum and 25% on steel.

The Talking Fed: Fed Chair Jerome Powell has his first round of Semi-annual Monetary Policy hearings. Tuesday in front of the House Financial Services Committee and Thursday in front of the Senate Banking Committee. Here are a few of his statements:

- "some of the headwinds the U.S. economy faced in previous years have turned into tailwinds"

- "inflation remains below our 2 percent longer-run objective. In the FOMC's view, further gradual increases in the federal funds rate will best promote attainment of both of our objectives. As always, the path of monetary policy will depend on the economic outlook as informed by incoming data."

- "These interest rate and balance sheet actions reflect the Committee's view that gradually reducing monetary policy accommodation will sustain a strong labor market while fostering a return of inflation to 2 percent."

Overall he did very well in his responses to questions from committee members and kept to the same theme as his prepared remarks. He painted a picture of global growth, tax reform helping the economy, MBS purchases decreasing, concern over the lack of labor slack and was concerned that we might begin to see rising wages "soon".

Personal Income and Outlays: Personal Income increased by 0.4% in January which was a tic higher than expected. Personal Spending matched expectations with a monthly gain of 0.2%. The Fed's key measure of inflation, PCE YOY came in at 1.7% vs est of 1.6%. Core PCE YOY matched forecasts with a 1.5% reading.

Manufacturing: February ISM Manufacturing was the best since 2004 with a 60.8 reading which handily beat out estimates calling for a reading of 58.7. ISM Prices Paid jumped to a 6 1/2 year high (74.2 vs est of 70.5)

GDP: We got the first revision to the 4th QTR GDP and it was revised lower from 2.6% down to 2.5% which is exactly what the market was expecting.

What to Watch Out For This Week: