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MBS Highway Daily Updates 12/27/2022

Current position: Carefully Floating

Stocks and Mortgage Bonds are both lower to start the week.


Case Shiller Home Price Index

The National Case - Shiller Home Price Index, which is considered the "gold standard" for appreciation, showed home prices fell 0.5% in October. This is always a weak time of the year for housing, and after seasonal adjustments, home prices were only down 0.3%.


While home prices have been softening a bit, they are still up 9.2% on a year-over-year basis. The pace of appreciation decelerated from 10.7% in the previous report and 20.8% at the peak in March. This does not mean that home prices are down 11.6% from their peak; it means that home price gains have slowed to only 9.2% annually. Home prices have only declined 3% nationwide from their peak, and while this is certainly a softening, it's a far cry from a crash of 20-30% declines. The 10 and 20-city indexes are down 4.6% from their peaks, showing that the major cities are declining a bit more than the overall nation. Some of these cities were somewhat overheated and are now giving back a little more. Most of the major cities saw less of a loss than they saw in the previous month, which can show that things are slowly getting better.



FHFA House Price Index

The FHFA (Federal Housing Finance Agency) released their House Price Index, which measures home price appreciation on single - family homes with conforming loan amounts. Different than Case Shiller, it does not include cash buyers or jumbo loans. The FHFA reported that prices were flat in October after a 0.1% rise in September and are up 9.8% year over year. Home prices, according to the FHFA, are only down 1.1% from their peak. Based on this, you can extrapolate that the decline in Case Shiller is coming from higher priced homes where there is less demand.



This Week

Wednesday: Mortgage Apps, Pending Home Sales

Thursday: Initial Jobless Claims

Friday: No news; early market close


Technical Analysis

Mortgage Bonds are lower today, breaking beneath support at the 100 - day Moving Average and 100.758 Fibonacci level. Bonds are now testing the lows from December 13. If this level does not hold, there is more room to move lower until reaching the 50 - day Moving Average. The 10 - year Treasury was higher this morning but is now up against the 50 - day Moving Average ceiling, which is holding for now. Begin the day carefully floating.


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