New home sales will be up?

According to outlook and commentary services firm Econoday, new home sales should total 310,000 units in June, up from May's record-low 300,000.  The Census Bureau is scheduled to release its monthly new home sales data later this morning. The error ratio, however, could swing the new home sales into negative territory, month-on-month, as the possible range is listed between 280,000 to 350,000 home sales.  Months' supply of new homes on the market surged to 8.5 months in May, from 5.8 months in April, due to the drop in sales, Econoday noted in commentary. But the actual number of new homes on the market was down 1,000 in the month to an adjusted 213,000 — to its lowest level in 40 years, since 1970, the firm said.  Econoday noted that lower interest rates are likely to boost sales for the June data. Employment and income growth, however, also have an impact on the decision to buy housing.

More magic numbers from the WH

The numbers, projections, and estimates that come out of the White House under this administration are famous for their inaccuracy and fantasy-like quality, but even it is slowly coming around to reality, admitting that unemployment will stay at or above 9% until 2012. Of course, we can expect the truth to be varnished at least a little bit…well, maybe a lot:  it now believes the 10-year deficit will be $58 billion less than projected in February when the budget blueprint was first released, and that the economy will grow by at least 4% in 2011 and 2012.   Under the revised estimates, Uncle Sam will ring up $8.474 trillion in deficits between 2011 and 2020, down from the $8.532 trillion estimated in February.  In the near-term, the administration expects the 2010 deficit to come in at $1.47 trillion -- slightly lower than originally forecast and slightly above last year's deficit of $1.41 trillion. Meanwhile, the 2011 and 2012 deficits will come in somewhat higher than the White House forecast in February.  "The economy is still weaker than we'd like, and [there is] a medium-term and long-term fiscal situation that requires attention," outgoing White House Budget Director Peter Orszag said in a call with reporters.  In terms of taxes, the administration now expects that the Treasury will take in $402 billion less over the next 10 years than originally expected, but at the same time will also spend $461 billion less than was forecast.  The tax revenue collected will average 18.7% a year, slightly above the 40-year historical average. Federal spending, however, will average 23.2%, above the 20.7% historical average.  When asked what accounted for the White House's relatively optimistic growth estimates relative to other economists' forecasts, Christina Romer, who chairs the president's Council of Economic Advisers, said the administration believes rapid growth in business investment and an emphasis on U.S. exports is "what we think makes these numbers completely reasonable."  In other words she has no real basis for any of it…business as usual.

Freddie's mortgage and issuance $179bn in H110

Mortgage purchase and issuance at Freddie Mac rose to $30.9 billion in June, from $25.1 billion in May, bringing the year-to-date total to $179 billion for the first half of 2010 (HI10), according to a monthly volume summary.  Freddie's total mortgage portfolio decreased at an annualized rate of 0.9% in June. Total guaranteed Participation Certificates (PCs) and structured securities issued fell at an annualized rate of 0.6%.  The monthly contraction in the portfolio arrives after Freddie wrapped up an initiative announced in February to purchase essentially all the single-family mortgages delinquent by 120 or more days out of its PC pools.  The single-family delinquency rate decreased to 3.96% in June from 4.06% in May, and the multifamily delinquency rate fell to 0.28% from 0.32%.  Refinance-loan purchase and guarantee volume was $19.1 billion in June, up from $17.1 billion in May. Freddie reported 21,367 modifications in June, for a total 93,558 in the first six months of 2010.  The aggregate unpaid principal balance of the mortgage-related investments portfolio slipped by $8.6 billion.

Soak the rich

Treasury Secretary Timothy Geithner said yesterday that the economy is not likely to slip back into recession, but letting tax cuts for the wealthiest Americans expire is necessary to show commitment to cutting budget deficits.  "We think that's the responsible thing to do because we need to make sure we can show the world that (we're) willing as a country now to start to make some progress bringing down our long-term deficits," he said on ABC's "This Week" program.  In other words, pretend the economy is great, soak the people most likely to invest in private enterprise, and call it "responsible."  Geithner said only 2 to 3 percent of Americans -- those making $250,000 or more a year -- will be affected when tax cuts enacted under former President George W. Bush end on schedule this year.  Republicans want to extend the tax cuts and Democrats are divided but Geithner said reductions for top earners should end.  There's another way to be responsible, of course, and that's by not driving the country into the wall at exactly the wrong time with programs we can't afford, but no one in the administration has stumbled on that idea yet.  "I think the most likely thing is you'll see an economy that gradually strengthens over the next year or two, you'll see job growth start to come back, investments expanding ... but we've got a long way to go still," Geithner said.  Indeed.  In fact, for some reason this administration is intent upon making it as long as possible.

DSNews.com - GSEs next?

Now that the Obama administration is finished "fixing" financial regulatory reform, it’s setting its sights on restructuring the housing finance system, namely the GSEs.  The White House says it will put forth a formal proposal by early next year, and some say its focus will be a departure from the age-old adage of homeownership as everyone’s “American Dream,” and shift support for the housing market from Fannie Mae and Freddie Mac to the private sector.  There’s no doubt change is coming for the nation’s two largest mortgage companies. Many were disconcerted that the Dodd-Frank Wall Street Reform and Consumer Protections Act didn’t include a new blueprint, or at least new rules, for Fannie and Freddie.  Rep. Darrell Issa (R-California), ranking member of the House Oversight and Government Reform Committee, called the president’s signing of the Dodd-Frank bill a “charade” on true reform, particularly in light of Issa’s recent investigation that revealed former executives at both Fannie Mae and Freddie Mac accepted so-called sweetheart loans from subprime mortgage lender Countrywide before it imploded.  Since the federal government took control of the GSEs in September 2008, the two companies have had to draw $146 billion in federal funding to stay afloat, giving taxpayers an 80 percent ownership stake in the mortgage financiers. Fannie and Freddie’s rescue has become the costliest of all the government bailouts, making the fact that the two companies were never mentioned in a bill that promises to end “too-big-to-fail” even that much more ironic.  Recent estimates from the Congressional Budget Office (CBO) put the tab for subsidizing Fannie and Freddie at $389 billion, when all is said and done.