I’ve Heard This Song Before

Yeah, It Looks Like a Drop


Right off a cliff


Running into a wall


A primer in statistics


Real world consequences of the example


Spiking Mortgage Rate


Supply chain still f%$#ed

Just 14 years after the last housing crash, it looks like we are headed for another one.

Low end house sales have fallen off a cliff, interest rates are spiking, the housing inventory is spiking, as is time on the market.

Seems like old times, doesn't it?

Given that Wall Street is even more involved in real estate than it was before the last recession, I more than one Bear Stearns type collapses, followed by a multi-trillion dollar bailout, because, to quote (not) Tallyrand, they have learned nothing, and they have forgotten nothing:

Sales of new single-family houses in April plunged by 16.6% from March and by 26.9% from a year ago, to a seasonally adjusted annual rate of 591,000 houses, the lowest since lockdown April 2020, according to the Census Bureau today. Sales of new houses are registered when contracts are signed, not when deals close, and can serve as an early indicator of the overall housing market.

………

Unsold inventory of new houses spiked in a historic month-to-month leap of 34,000 houses, and by 127,000 houses from April last year, to 444,000 unsold houses, seasonally adjusted, the highest since May 2008.

Both, the month-to-month leap and the year-over-year leap were the largest leaps ever recorded, both in numbers of unsold houses and in percentages.

………

Supply of unsold new houses spiked in a historic month-to-month leap from an already high 6.9 months’ supply in March to a dizzying 9.0 months’ supply in April, having nearly doubled from a year ago:

The bottom fell out under $400,000. At the top end, things weren’t so bad: sales were flat year-over-year in the $400,000 to $750,000 range, though they fell on a month-to-month basis. But you cannot maintain a housing market by just selling to the wealthy.

The basically, the cheaper houses are first houses, and if you can't buy first houses, you cannot buy second houses, and this percolates up the chain.

There was a brief opportunity to break the power of parasitic finance in 2009, that opportunity was missed, and we are going to suffer from this failure again, and again, and again, and again.