Is the grossly unhealthy housing market back?

Just when I thought the number of days on the market was going back to normal, the number of days on pre-owned homes dropped to 22 days. Why is this so important to me? If the number of days on the market is at or below teenage levels, it never bodes well for the housing market. Reaching this level is horribly unhealthy, and we’re not there yet, but we’re getting dangerously close.

To get anywhere near that level either there will be a massive mortgage boom that will eventually collapse, or there will be a housing shortage and too many people chasing a few.

With purchase application data at historically low levels, there is no major credit boom. There is no credit surge like we saw in 2002-2005. This is why I always draw the black line in the graph below. This is to show people that there hasn’t been a credit boom in years. If there had been a major credit boom then a recession, inventories would have surged in 2022.


Instead, active listings are near record lows, which wasn’t the case between 2012 and 2019. This is why there have been historically very few days on the market after 2020.

After the most significant home sales collapse in U.S. history is recorded in 2022 and sales data stabilizes in 2023, the total effective listed NAR is 1.04 million, up from 1.03 million last year.Here are the historical standards 2-2.5 million. In 2007, for context, we were a little above 4 million.

NAR total inventory data going back to 1982.


Thursday’s Home Sales Report rekindled my interest in the data line I once loved. Now I have to think that the day to market could return to teenage levels, even though home sales are at their lowest level in a decade.

from NAR: First-time buyers accounted for 29% of sales in April. Private investors bought 17% of the homes. All-cash sales accounted for his 28% of deals. Distressed sales accounted for his 1% of sales. Usually the property remained on the market for his 22 days.


As you can see from the chart above, fewer market days is not a good thing, but this is the reality of the world we live in after 2010. The structure of the US residential credit channel has changed the inventory channel in the US housing market. Changed. This is not like 2008 and never will be. If things were like they were in 2008, 2023 would be four to six years too early. As we saw in 2005-2008, credit stress must accumulate over many years. All before the job-loss recession data came out.


One of my themes with existing home sales is that after one big home sales report, you shouldn’t expect too much to happen. The March report saw its rebound as it recorded one of the most significant monthly sales reports in US history. However, the backlash after that was an abnormal situation, so I thought that I would not see much growth.

NAR: Total sales of existing homes fell 3.4% from March, reaching a seasonally adjusted annual rate of 4.28 million units in April.


When we first saw home sales soar, Four a million To Four.55 a million, which was a historically insane huge monthly turnover. This is the tricky part when reading fast economic data. If the data moves slowly from month to month in the past, it becomes easier to navigate trends.

However, if there is a crash, like in 2022, and then the purchase offer data starts to improve from 11/9/2022, then that’s preparation for a huge month of sales, and then within bounds. should enter. Between 4 and 4.6 million. Although this year’s purchase requisition data has more positive than negative data, actual net transaction volume growth this year has been over 4.6 million over the period and under 4 million over the period. It is not.

The focus should be on mortgage rates now, as the requisitions are highly seasonal and that seasonality mostly ends after May. Up and down mortgage rates moved the market. Interest rates are rising now.We saw the impact in this week’s Purchase Requisition Data report, but it was down 4.8% every week.

But for 10-year yields and mortgage rates, everything still looks good. My 2023 forecast for him is based on what I believe the range of 10-year bond yields will be: 3.21%-4.25%,And so far, that range remains true. This range means that the mortgage interest rate will be in the range of: 5.75% to 7.25%. If the 4-week moving average of unemployment claims rises above 323,000, the decline in 10-year yields should fall below 3.21% and mortgage rates should fall. However, the number of applications for unemployment insurance has not reached the stage of breaking through that level.


Spreads have been further squeezed by the recent banking crisis, and the debt ceiling has put market stress on short-term bonds.home loan interest rate 7% plus The housing market has cooled significantly last year and this year. When the rate transitions from 5.99% To 7.10%the third consecutive significant decline in purchase requisition data.

What can be said about all housing data going forward is that last year’s historic collapse in demand makes year-over-year comparisons much easier. This will happen to him later in 2023, especially likely in the last two months of the year. Therefore, any year-over-year improvement in home sales and purchase application data should be marked with an asterisk, with the understanding that this is primarily due to stabilizing demand and easier earnings. there is.

NAR: Year-on-year, sales declined by 23.2% (down from 5.57 million units in April 2022).


All in all, there weren’t too many surprises in today’s existing home sales report, but the harsh reality is that as the Weekly Home Market Tracker showed, active listings growth has been negative since the beginning of the year, so it’s not going to hit the market. The sun is starting to go down again.

From the NAR: “Roughly half of the country is experiencing price increases,” Yoon said. “Even in a market with lower prices, multiple selling conditions have returned in the spring buying season after the winter market calmed down. Complaints and forced property sales are virtually non-existent.”

Mortgage rates will be everything for the rest of the year and will be reflected in the movement of 10-year yields. Note that rising interest rates impact sales data in the same way that falling mortgage rates do. This is why we use the housing market tracker to track it every week.

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