More History Rhyming

Home Sales

Home SupplyWhile much of the focus has been on the slow decline of commercial real estate, we are also seeing significant declines in single family home sales.

We need to remember that the 2008-2009 housing crash was not the result of home prices falling.  Instead it came from home price increases falling from 10-15% to just 5%, which prevented over-leveraged buyers from refinancing.

Sales of existing single-family homes fell by 1.9% in July from June, seasonally adjusted, the second month in a row of declines, to an annual rate of 3.69 million sales, sinking deeper into the mud at the bottom that sales have been in for four years, according to data by the National Association of Realtors today.

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Supply of single-family homes rose to 4.6 months in July, the highest since the summer of 2016.

Supply is a function of inventory and sales – how much inventory there was at month-end in relationship to sales during the month. Sales sank deeper into the mud at the bottom, while inventories rose to 1.4 million single-family homes for sale.

While "regular" interest rates are high, real interest rates (regular interest rates - inflation) have actually remained quite low.

My prediction is that we are going to see a reckoning in the real estate markets sooner rather than later.