Bids on the CME Case Shiller home price index futures were higher in May across all ten regional contracts. (See table below). SDG and SFR had the biggest gains, while CHI and LAX were barely higher.
Activity remained low (`13 contracts traded?). Most activity was in either the front contract (May 2023) or the 10-city index futures.
Bid/ask spreads tightened.
Front contracts (e.g. May 2023, before expiration, and Aug, Nov '23) rallied as concern about declining home inventory grew.
The curve between the benchmark HCIG24 (ten-city contract for Feb 2024) and HCIG25 became further inverted as the front contract is being pulled higher, but hedgers express a desire to sell for 2025.
Longer-dated contracts are quoted with increasing prices, but with no volume. (Note that implied gains from 2025 to 2026 and 2027 are well below inflation).
Most of the hedging inquiries that I'm seeing are for the California markets.
I've received a number of inquiries from put and call buyers. I'd entertain OTC ideas, starting with the 10-city index contracts.
I would like to "stir the pot" and get some OTC activity started in Austin and Phoenix (as forecasts vary on how they are projected to perform).
Feel free to DM if you'd like to discuss any of the above, or if you'd like to add/reduce exposure to any metro.
Thanks, John
