New homes also lost 11% in value from last month! Median new home sales price was 229k in April. That's massive. It's probably closer to 20% because of all the hidden rebates (after closing cash back rebates of $100k+ in Cali, AZ, FL and NV) and upgrade packages (granite counters, pools, even new cars) the builders have to give away. "...the median price of a new home sold last month fell to $229,100, a record 11.1 percent decline from the previous month. The big price decline indicated that builders are slashing prices in an effort to move a huge overhang of unsold homes."
Market wants a rate cut, they will have to try something else now. Home prices have risen 100% over the last ten years, an 11% drop in the inflated areas is nothing. Its just a revision to the mean.
It was a 11% one month drop. It was a 11% drop on a nationwide basis, not just in certain "inflated" area. But you're right; this reduces the odds of rate cuts.
Face it, the housing "put" is gone, this may upset the market. Lets just see how this plays out. The market will let us know, its our friend, maybe its tried and needs to lie down.