Ladies and gentlemen, the housing market is in full Bidenomics recovery mode — and by that I mean it's not recovering in the slightest.
That 16-year high rounds out to 2008 for those of you who are bad with math. And any time I see 2008 and "home sales slump" in the same headline it kinda gives me the willies.
New home sales are a "leading indicator of the housing market," so look for the rest of the housing market to follow suit here.
Sales of new U.S. single-family homes dropped to a six-month low in May as a jump in mortgage rates weighed on demand, offering more evidence that the housing market recovery was faltering.
But the sting from the largest decline in sales in more than 1-1/2 years, reported by the Commerce Department on Wednesday, was softened by a sharp upward revision to data for April, which now shows sales rising instead of falling as previously estimated. Supply was the highest in more than 16 years …
New home sales declined 11.3% to a seasonally adjusted annual rate of 619,000 units last month, the lowest level since November, the Commerce Department's Census Bureau said. The percentage-based drop was the biggest since September 2022.
Economists hope and pray that the Fed will cut interest rates near the end of summer and ease the pain of this market, but I'm old enough to remember when they were going to cut them at the beginning of the year.
We'll have to wait for inflation to drop below 2% (good luck with that) for the Fed to make a move on that rate, which at present sits around 5.25%-5.5%. Mortgage rates are currently hovering around 7%.
Here's the outlook for the future:
New home sales are likely to remain weak, with a report from the Mortgage Bankers Association on Wednesday showing applications for loans to purchase a home rose 1% last week on a seasonally adjusted basis from a week earlier.
‘New home sales may continue to be subdued until we see a more substantial decline in mortgage rates,' said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. ‘We do expect a modest rebound in sales later in the second half of this year, when we look for mortgage rates to decline more decisively below 7% once Fed rate cuts get underway.'
Remember, summertime is supposed to be boom-time for business in the real estate market.
But in the best economy ever, that just doesn't seem to be a thing anymore.
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