Latest / Bloomberg Intelligence / Fannie Mae's Duncan: Home Buyers Say Good Time to Buy (Audio)

Transcript

Fannie Mae's Duncan: Home Buyers Say Good Time to Buy (Audio) · Bloomberg Intelligence

• 0:04
  Speaker 1: Broadcasting live to New York, Bloomberg eleven, Brio to Washington,
• 0:08
  Speaker 1: d C, Bloomber to Boston, Bloomberg twelve under It to
• 0:12
  Speaker 1: San Francisco, Bloomberg to the country. Julie is at Channel
• 0:17
  Speaker 1: one and around the globe the Bloomberg Radio plus DApp
• 0:20
  Speaker 1: and Bloomberg got gone. This is taking Stock coming up
• 0:24
  Speaker 1: on Taking Stock to Fannie May Home Purchase Sentiment Index.
• 0:29
  Speaker 1: It fell one and a half per points to five
• 0:32
  Speaker 1: in August, but continued its gradual climb upward for the
• 0:36
  Speaker 1: same period last year. We've got more details coming up.
• 0:40
  Speaker 1: And when you hear the name McAfee, do you think
• 0:43
  Speaker 1: cyber security, Well, John McAfee, he is the pioneer who
• 0:47
  Speaker 1: got so much of this cyber security online rolling. We're
• 0:50
  Speaker 1: gonna speaking to him in this half hour as well. Now,
• 0:54
  Speaker 1: let's get right back to Charlie Pellett in the Bloomberg
• 0:56
  Speaker 1: newsroom with a Bloomberg Business lave and I thank you
• 0:59
  Speaker 1: very much, cat Lean, Hey, thank you, pim Fox, the
• 1:01
  Speaker 1: tal the smp Nastact. They are all lower. Stocks dropping
• 1:05
  Speaker 1: from near record levels, the dollar gaining as traders digest
• 1:09
  Speaker 1: mixed data in the U S economy, amid bets interest
• 1:12
  Speaker 1: rates will stay low. This update is brought to you
• 1:15
  Speaker 1: by Sector Spider e t F S. Why by a
• 1:17
  Speaker 1: single stock when you can invest in the entire sector.
• 1:21
  Speaker 1: Visits Sector sp d r S dot com or call
• 1:26
  Speaker 1: six Sector e t F. The U S economy grew
• 1:30
  Speaker 1: at a modest pace in July and August as a
• 1:32
  Speaker 1: strong labor market fail to put much upward pressure on
• 1:35
  Speaker 1: wages and prices. That is, according to the Federal Reserves
• 1:39
  Speaker 1: Beige Book report. It said, quote in general, expectations of
• 1:43
  Speaker 1: wage growth for the coming months where modest and price
• 1:46
  Speaker 1: increases quote remains slight overall. So where does all of
• 1:49
  Speaker 1: this leave the Federal Reserve at this month's FED meeting.
• 1:52
  Speaker 1: Bruce Kasman as chief economist to JP Morgan Securities. He
• 1:56
  Speaker 1: was interviewed moments ago right here on taking stock. I
• 1:59
  Speaker 1: think there's a case for a rate high in September.
• 2:01
  Speaker 1: I don't think the FIT is going to decide to
• 2:03
  Speaker 1: raise rates in September. I think they're more likely to
• 2:06
  Speaker 1: use the meeting to basically set us up that if
• 2:09
  Speaker 1: kid things continue, that as they expect that they're going
• 2:12
  Speaker 1: to move at the end of the year. The US
• 2:14
  Speaker 1: Airlines climbing the most in almost two months after Southwest
• 2:18
  Speaker 1: said it would slow capacity growth next year. Southwest shares
• 2:22
  Speaker 1: a four and a half percent. American Airlines up five
• 2:25
  Speaker 1: point four p u a l parent of United Than Continental,
• 2:28
  Speaker 1: up by five point two percent. Billionaire activists Bill Ackman
• 2:32
  Speaker 1: taking aim at Chippotle Mexican grill. Chipotle up five point
• 2:36
  Speaker 1: seven percent, Apple out with a new iPhone seventh down
• 2:39
  Speaker 1: one tenth of one percent. And now let's look at
• 2:42
  Speaker 1: some of the other stories making news. Thank you, Charlie
• 2:45
  Speaker 1: from the Bloomberg Newsroom. I'm Matt Millard. Donald Trump says
• 2:49
  Speaker 1: his foreign policy would aim to achieve peace through strength
• 2:53
  Speaker 1: and focus on diplomacy, not destruction. In the speech in
• 2:57
  Speaker 1: Philadelphia today, the Republican presidential nominee also said if he wins,
• 3:01
  Speaker 1: he'll instructs his generals to come up with a plan
• 3:03
  Speaker 1: within thirty days to defeat and destroy the Islamic State.
• 3:08
  Speaker 1: President Obama is paying tribute to survivors in Laos who
• 3:12
  Speaker 1: were hurt by leftover bombs from the Vietnam War. Bloomberg's
• 3:16
  Speaker 1: Michael Barr has the story. President Obama tour the rehabilitation
• 3:20
  Speaker 1: center in the Lyotian Capital. The President says the US
• 3:23
  Speaker 1: has a profound moral and humanitarian obligation to work to
• 3:27
  Speaker 1: prevent more bloodshed from the remnants of the US bombardment.
• 3:31
  Speaker 1: These bombas have taken the lives of farmers working in
• 3:33
  Speaker 1: the fields, traders gathering scrap metal, children playing outside. Who
• 3:37
  Speaker 1: thought these small metal balls could be turned into a toy?
• 3:41
  Speaker 1: On Tuesday, President Obama pledged loos ninety million dollars over
• 3:45
  Speaker 1: three years for clean up efforts. Michael Barr Bloomberg Radio,
• 3:49
  Speaker 1: Florida Republican Congressman David Jolly brought some unusual guests with
• 3:53
  Speaker 1: him to the House floor. Jolly showed his fellow lawmakers
• 3:56
  Speaker 1: a jar of one live mosquitoes, trying to highlight the
• 4:00
  Speaker 1: fear of zekea that Flutidians are living with. Can you imagine, colleagues,
• 4:05
  Speaker 1: the fear and anxiety in this chamber. If these hundred
• 4:08
  Speaker 1: mosquitoes were outside this jar, not inside this jar, members
• 4:11
  Speaker 1: of Congress would run down the hall to the physician's
• 4:13
  Speaker 1: office to be tested. They would spray themselves before coming
• 4:17
  Speaker 1: down here. This is the fear of Floridians right here.
• 4:21
  Speaker 1: Global News twenty four hours a day, powered by over
• 4:24
  Speaker 1: journalists and analysts and more than one countries. I'm Matt Miller.
• 4:28
  Speaker 1: This is Bloomberg, and we thank you US Equities. Laurel
• 4:33
  Speaker 1: little changed right now with the SMP down two points
• 4:36
  Speaker 1: to three, a decline of one tenth of one percent.
• 4:39
  Speaker 1: I'm Charlie Pellett and that's a Bloomberg business flash. This
• 4:45
  Speaker 1: is taking stock. The FED in focus on Bloomberg Radio
• 4:49
  Speaker 1: if had a reserve, just released its Beige Book, anecdotal
• 4:53
  Speaker 1: summary of the US economy gathered from its twelve district
• 4:57
  Speaker 1: banks to that is focused on jobs to feed, his
• 4:59
  Speaker 1: focus on inflation, and the FETE is focused on the consumer,
• 5:02
  Speaker 1: and certainly a look at housing is very important. One
• 5:05
  Speaker 1: of the reasons people argue that VET should be very
• 5:07
  Speaker 1: weary of raising rates too quickly is that low mortgage
• 5:10
  Speaker 1: rates have helped lower home affordability and it helped keep
• 5:14
  Speaker 1: the housing sector steady and growing. Duck Duncan joins US now.
• 5:19
  Speaker 1: He's senior vice president and chief economists at Fannie May
• 5:22
  Speaker 1: in Washington, d C. He's gonna share share with US
• 5:25
  Speaker 1: Fannie new newly released consumer survey of attitudes on housing. Doug,
• 5:31
  Speaker 1: welcome to the show. Thank you to be here. Well,
• 5:33
  Speaker 1: first of all, let's say the Beige Book, uh really,
• 5:36
  Speaker 1: as as Bruce Kasman from jp borg and just said,
• 5:39
  Speaker 1: they don't call it beige for nothing. Really, when you
• 5:42
  Speaker 1: run through it seems there's nothing so striking about it,
• 5:45
  Speaker 1: just a view that the economy's moving along kind of steady,
• 5:49
  Speaker 1: not a lot of momentum, but maybe not a lot
• 5:52
  Speaker 1: of pullback either. What do you see, Doug, Definitely not
• 5:54
  Speaker 1: very exciting. Our our forecast for the years unchanged from
• 5:58
  Speaker 1: the beginning of the earth a little less than UH
• 6:01
  Speaker 1: two growth, which is not very exciting. We we don't
• 6:05
  Speaker 1: from from the Fed perspective. Um, you know, they're trying
• 6:08
  Speaker 1: to prepare the market for some move We would agree
• 6:12
  Speaker 1: not until the end of the year, at least. In fact,
• 6:14
  Speaker 1: in our own forecast we don't have them moving until
• 6:16
  Speaker 1: next year. We think the the third quarter numbers will
• 6:20
  Speaker 1: be stronger, but some move back in in December. They
• 6:26
  Speaker 1: talk about being data dependent, but they don't describe exactly
• 6:29
  Speaker 1: which data, so it's a little hard to tell. Um.
• 6:32
  Speaker 1: Clearly employment data is part of it, and the market
• 6:37
  Speaker 1: took the most recent employment report as putting them off
• 6:41
  Speaker 1: of September. We would agree with that even though in
• 6:44
  Speaker 1: the long run our view is to sustain the unemployment
• 6:48
  Speaker 1: rate at a level. A constant level only takes between
• 6:51
  Speaker 1: eighty and two jobs a month, So if they want
• 6:54
  Speaker 1: to use that for a justification, they can, but the
• 6:56
  Speaker 1: market is not prepared for it. In September, Dun, duncan,
• 7:00
  Speaker 1: can you explain how you formulate the Fannie May Home
• 7:04
  Speaker 1: Purchase Sentiment Index and what is it telling us currently? Sure,
• 7:09
  Speaker 1: it's a We survey a thousand households of months. We've
• 7:12
  Speaker 1: been doing that for a number of years now. Out
• 7:14
  Speaker 1: of that, we took a look at all the questions
• 7:16
  Speaker 1: that we ask and ask which were most influential on
• 7:21
  Speaker 1: the on affecting the attitude of people about buying a house,
• 7:25
  Speaker 1: because it's buying a house that we think is the
• 7:27
  Speaker 1: housing sector's largest contribution to economic growth and um. Those
• 7:32
  Speaker 1: questions include things like, is it a good time to
• 7:35
  Speaker 1: buy a house, is it a good time to sell
• 7:37
  Speaker 1: house in the next twelve months? What do you think
• 7:39
  Speaker 1: house prices will do in the next twelve months, What
• 7:41
  Speaker 1: do you think mortgage rates want to do? About six
• 7:45
  Speaker 1: questions they're intended to look forward in time over the
• 7:48
  Speaker 1: next twelve months. What does your attitude tell you about
• 7:50
  Speaker 1: the housing market. So the most recent release was down
• 7:54
  Speaker 1: slightly from the all time high. Now we've been doing
• 7:58
  Speaker 1: this since about two thus in ten, so it hasn't
• 8:01
  Speaker 1: gone through a full housing cycle. So we caution people
• 8:04
  Speaker 1: don't overinterpret what you're seeing, and it varies a little
• 8:07
  Speaker 1: bit from month to month, but over the course of
• 8:09
  Speaker 1: the past year, it's been largely aligned with our forecast,
• 8:12
  Speaker 1: which is for about a four percent growth in total
• 8:15
  Speaker 1: home sales this year. People are increasingly confident about the
• 8:20
  Speaker 1: stability of their employment, and they've seen reasonable progress on
• 8:24
  Speaker 1: their financial outlook. Well, look, it's interesting to me that
• 8:28
  Speaker 1: the nuts share of Americans who say it's a good
• 8:30
  Speaker 1: time to buy a house increased for the third consecutive month.
• 8:33
  Speaker 1: It rose by a percentage point in latest survey to
• 8:36
  Speaker 1: thirty four percent. But those who say it's a good
• 8:38
  Speaker 1: time to sell fell five percentage points from an all
• 8:40
  Speaker 1: time high in July uh and it felt a fifteen percent.
• 8:44
  Speaker 1: People don't expect prices to go up as much. Are
• 8:49
  Speaker 1: Is this just reflecting the fact that prices already when
• 8:51
  Speaker 1: up so much that the sellers are facing reality. I'm
• 8:55
  Speaker 1: a little bit surprised that buyers are still so optimistic
• 8:57
  Speaker 1: when in many places they are facing prices that are
• 8:59
  Speaker 1: so much higher. Yeah, it is, Uh, it seems a
• 9:02
  Speaker 1: little bit contradictory, although I would say part of it
• 9:05
  Speaker 1: is seasonal. That is, for those who wish to sell
• 9:08
  Speaker 1: a house, were past the seasonal peak in home sales,
• 9:12
  Speaker 1: so that's probably being picked up a little bit by
• 9:14
  Speaker 1: the good time to sell. In terms of a good
• 9:17
  Speaker 1: time to buy, well, it's a fairly small increase, and
• 9:21
  Speaker 1: I think that probably goes along with their attitude about
• 9:25
  Speaker 1: the stability of their employment and their prospects for their
• 9:29
  Speaker 1: household financial uh progress The no question, the biggest hurdle
• 9:35
  Speaker 1: today is the lack of adequate supply, particularly at the
• 9:39
  Speaker 1: low price points. In some markets on the West Coast,
• 9:42
  Speaker 1: for example, one month supply at the current pace of sales.
• 9:45
  Speaker 1: That's leading to significant price increases uh in many of
• 9:49
  Speaker 1: those markets, particularly as I say, at the low end,
• 9:52
  Speaker 1: which is where the first time homebuyers typically are. Well.
• 9:54
  Speaker 1: I'm glad to mention the West Coast because I wonder
• 9:56
  Speaker 1: if you could tell us is there anything that we
• 9:58
  Speaker 1: should know about geograph quickly because housing is a local business. Yeah,
• 10:03
  Speaker 1: there's the question is our builders able to build in
• 10:09
  Speaker 1: the local jurisdiction at a price point that would meet
• 10:12
  Speaker 1: the the financial ability of households who would like to buy.
• 10:16
  Speaker 1: And clearly in a number of West Coast markets which
• 10:19
  Speaker 1: have been very strong and employment and are restrictive in
• 10:22
  Speaker 1: terms of development, housing has become unaffordable in a number
• 10:28
  Speaker 1: of those of those markets. That that's really the big
• 10:32
  Speaker 1: question as where the supply side grow uh and slow
• 10:35
  Speaker 1: the pace of price increases. Thank you very much for
• 10:38
  Speaker 1: spending time with us. So. Doug Duncan is Senior vice president,
• 10:42
  Speaker 1: chief economist for Fannie May, based in Washington, d C.
• 10:46
  Speaker 1: Home to Bloomberg one and one oh five point seven
• 10:51
  Speaker 1: h D two. This is taking Stock. I'm pim Fox.
• 10:54
  Speaker 1: My co host Kathleen Hayes. This is Bloomberg be in Focus.
• 11:01
  Speaker 1: Brought to you by Willoughby since eighteen ninety eight, New
• 11:04
  Speaker 1: York City's boutique camera store for precision crafted, hostile, blood
• 11:06
  Speaker 1: and Like a cameras, plus a full selection of go
• 11:08
  Speaker 1: pro action adventure cameras. Willoughby's at the corner of Fifth
• 11:12
  Speaker 1: Avenue and thirty first Street,