There’s not a lot to update. Bid/Ask spreads have been inching tighter on a number of contracts (see summary table below). Activity seems to be concentrated in the front contracts, and in regions where there was some trading in August (e.g. CUS, LAX, and SFR) but there doesn’t appear to be too many people involved in the price adjustments and many of the price adjustments have been for the minimum trading move of 0.2 points. The CUS market seems to have had the most attention.
The CME market is pricing in continued gains between now and the (non-seasonally adjusted) November Case Shiller release (of Sept #’s). (See candle graph below-left that translates bids, offers and mid-market levels into %/spot). CHI, with strong seasonal factors is pricing in the highest gains, but other contracts with smaller seasonals (e.g. LAV) are also strong. As the height of the candle reflects the bid/ask spread one can see that that tightest markets are CHI, CUS, LAX and SDG.
Some of the outright bid/ask adjustments reflect tighter bid/asks in the calendar spread markets. For example (referring to the table below that highlights the CUS contract) the CUS X15_X16 calendar spread was -10.0/-8.4 at the time this was written (all prices are stale by the time you read this). This 1.6 bid/ask in a calendar spread is tight by historical norms. The calendar spread market translates into implied HPA of 4.2 to 5.0% for the one-year period. Anyone expecting HPA to be outside that range might consider buying or selling the spread. (Similar tables are available for other regions with different implied HPA).
Net, if the past few months is any indication, these markets will remain quiet up to the middle of next week (which is fine with me as I’m on a five-day bike trip). That said, I’m open to touting, or responding to, any axes that traders might have. Feel free to contact me at email@example.com if you’d like to help me stir the pot.