Might yesterday's Fed announcement to leave rates unchanged, justify higher home prices, and therefore higher (short-term) CME Case Shiller futures?
Immediately after yesterday's announcement by the Fed that they would leave the targeted Funds rate unchanged, market rates fell with the 10-year futures rallying 1/2 point. This should translate into lower mortgage rates, just as the "Spring Home Buying Season" gets under way (most notably in colder areas). In anticipation that more buyers (at the margin) might qualify, or that buyers could now reach just a little further to buy their dream house, I raised many of my quotes on the CME Case Shiller home price index futures. The May '19 (K19) contract is likely not to be impacted as it settles on the index value for activity during Jan-March, >75% of which has already occurred. Most of the changes were to contracts expiring later in the year, most notably to the Aug '19 (Q19) contracts that reference the Case Shiller index for the period April -June.
Further, I'd expect buyers in lower-priced areas (e.g. LAV, CHI) to be more impacted by lower borrowing costs that those in the more expensive areas, so those contracts should have seen bigger gains.
While there may be a bump to 2019 home prices, I'm more reserved about prospects for 2020 and beyond (i.e. on fears of recession, an even longer run in home prices that could break badly), so those contracts saw smaller price increases. That said, the Fed news did raise bids across the board, so any longer-term homeowners looking to hedge, could do so today at better levels that yesterday.
Finally, all of the above comments would also apply to Case Shiller regions not referenced by CME contracts. That is, I'd expect Cleveland and Detroit indices to jump (relatively) more than Seattle.
I offer that last comment as a reminder that I'm open to facilitating OTC hedging agreements for many "non-CME" regions, and am particularly interested in taking on Atlanta, Charlotte, or Minneapolis Case Shiller index exposure, as well as exposure to other areas such at Austin, Nashville and Salt Lake. Anyone interested in discussing a hedge for those regions, or anyone looking to add/reduce exposure to any other home price index, should contact me (on new Contact button!) or at email@example.com