Existing-home sales declined 0.7 percent in May. It was the 22nd decline in 28 months. But the median price hit a new record.
The NAR reports Existing-Home Sales Edged Lower by 0.7% in May as Median Sales Price Reached Record High of $419,300
Key Highlights
- Existing-home sales slipped 0.7% in May to a seasonally adjusted annual rate of 4.11 million. Sales descended 2.8% from one year ago.
- The median existing-home sales price jumped 5.8% from May 2023 to $419,300 – the highest price ever recorded and the eleventh consecutive month of year-over-year price gains.
- Total housing inventory registered at the end of May was 1.28 million units, up 6.7% from April and 18.5% from one year ago (1.08 million). Unsold inventory sits at a 3.7-month supply at the current sales pace, up from 3.5 months in April and 3.1 months in May 2023.
- First-time buyers were responsible for 31% of sales in May, down from 33% in April but up from 28% in May 2023.
- All-cash sales accounted for 28% of transactions in May, unchanged from April and up from 25% one year ago. Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in May, identical to April and up from 15% in May 2023.
NAR Comments
“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” said NAR Chief Economist Lawrence Yun.
“The mortgage payment for a typical home today is more than double that of homes purchased before 2020. Still, first-time buyers in the market understand the long-term benefits of owning.“
Actually, what consumers understand is inflation is killing them. However, misguided economists don’t consider this inflation.
Existing-Home Sales Percent Change from Month Ago
Existing-home sales are down 23 out of the last 28 months.
Existing-Home Sales Supply
“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” said NAR Chief Economist Lawrence Yun.
Taming increases won’t do much for this market.
New buyers some combination of a price crash and mortgage rate crash coupled with a non-recessionary environment and big wage gains. Good luck with that.
Existing-Home Sales Percent Change from Year Ago
Data on the St. Louis Fed is limited. Year-over-year sales are down for at least 23 consecutive months.
At some point, year-over-year sales will rise but don’t make too much of it. The following chart puts sales into the proper perspective.
Existing-Home Sales Since 1968
We are in the midst of the third transaction crash since 1968. This crash has not been accompanied by a price crash.
Sales are about where they were in November of 1978. Population-adjusted sales are abysmal.
The Civilian Noninstitutional Population (age 15+ not in the military or prison, etc.) was 132.9 million in November of 1978. As of May 2024, the population was 268.2 million.
Housing Starts and Permits Drop to the Lowest Level in Four Years
Yesterday, I reported Housing Starts and Permits Drop to the Lowest Level in Four Years
Hoot of the day: The Bloomberg Econoday consensus had housing starts and permits both rising. Several charts show how much they dropped.
Where Do We Put 8 Million Illegal Immigrants?
On May 23, I asked Where Do We Put 8 Million Illegal Immigrants?
Millions of immigrants keep pouring in. New residential construction has stalled and multi-family construction is in decline. Completions are rising, but is that enough housing?
One of Every Five New York City Hotels is Now a Migrant Shelter
On June 2, I noted One of Every Five New York City Hotels is Now a Migrant Shelter
New York City hotel prices have never been higher. Illegal immigration is part of the reason why. Mayoral graft is another.
Don’t worry, LA has the affordable housing solution starting with “affordable housing units at $600,000 each to house 278 homeless out of 75,518 in the county.
Please note A New High-Rise Building Will House the LA Homeless in $600,000 Units
If the county were to shelter the 75,518 homeless, the cost would be $45,310,800,000. That’s $45.3 billion, excluding free property taxes, case workers, maintenance, utilities, insurance, food, police, clothes, doormen, or medical care.
And it would not stop there. Every homeless person in the state would move their tent to LA to participate.
This dear woke fans is what’s known as “affordable housing”.
Clearly, the proper solution is to do the same thing for 8 million illegal migrants. After all, free food, free clothes, and free shelter is a right.
More seriously, the economy is slowing on many fronts.
For example, Retail Sales Were Very Weak in May Counting Negative Revisions
Also, please consider my follow-up post Breadsticks at Olive Garden Highlight Financial Strain on America’s Middle Class
A friend emailed a link regarding Olive Garden traffic and sales. I created a new chart that agrees. Call it the breadstick indicator.
Job Openings vs Unemployment Looks Very Much Like a Recession Has Begun
Weakness is pervasive.
For discussion, please see Job Openings vs Unemployment Looks Very Much Like a Recession Has Begun
Unemployment is rising and job openings have crashed. It looks recessionary.
I read in Mish’s article that the median price for a house in the USA is around $419,000. Census bureau states the median household income is around $73,000.
Hence median price to median household income ratio is around 6 and in a high interest rate environment (~7% mortgage rate).
I was expecting the 30 yr mortgage rate drops to 5.5% by the end of this year if the ratio is going to remain above 5.
I’d ask the home builder to buy 4 discount points to lower that rate from 5.5% to 4.5% as part of making the mortgage affordable.
Price changes are meaningless in this illiquid market. Loses in value have effectively been stalled from being realized.
I agree. There is no price discovery at work.
“The mortgage payment for a typical home today is more than double that of homes purchased before 2020”
That is insane. And how do you scrape together a down payment?
Thanks Joe Biden!
Make sure you bring 10 people to vote with you.
Can I bring dead Democrats?
Higher for longer rates are sucking the life blood out of the economy.
Wrong. It’s artificially low interest rates that have time and time again, sucked the wealth out of our economy. Don’t blame today’s necessarily higher rates on your woes.
Current mortgage rates are about average the historical norm. Both my homes had a 9% interest rate.
Everything goes up in price as time goes on. Ask an 80 year old about the days when they made $1.50/hr and a house was $15k.
It would be ludicrous to think prices won’t be even higher than this twenty plus years from now.
That has been the case in our fiat debt based currency system but it doesn’t have to be that way
I can remember working as a kid for 50 cents an hour, less as a paperboy, more when bailing hay, and the house on 2.5 acres cost 3 grand where I raised a lamb for 4H; now all the ranch land is either zoned open space or vineyards and the same house is 1.5 mil.. The Stanford football team was still called the Indians and I got to urinate in Ken Kesey’s toilet bowl Jesus formerly frequented by the Hell’s Angels. In Jan. 68 I earned 17 cents and hour learning to kill in basic training in Bravo company, Ft. Lewis, but without any college graduates also enjoying the inclusive military communism of the GI (government issued three hots and a bunk) Joe’s world and the so called uniform code of military justice. However, when the Florida land bubble burst in the ’20s it was followed by the more widespread Great Depression in land and housing prices with bank runs and holidays.
That is about $3000 a year, so the home price to income ratio is 5. Seems somewhat high for back then (1950’s-1960’s) given that 30 mortgage rates were at least 6%.
I made $4.25 an hour working at Red Lobster in the front (hosting) in South Florida back around 1985.
I recall my family saying our 2 bedroom, 1.5 bath townhome rented for around $325 and it came with a gated yard along with a clubhouse and pool.
Home prices do not crash in a stagflation. They didn’t in the 1970’s and they aren’t now. Sales volumes will stay depressed until real interest rates collapse and/or peoples’ incomes rise enough to increase affordability. The latter could take quite a long time.
Yeah like forever You’re deluding yourself
What will rise quickly though is the real estate tax on your property. In the 1970s, people were walking away from their homes in NYC because they could no longer afford to pay the real estate taxes on them.
Yes, home prices didn’t crash, but a two family home with a retail storefront cost $15K in 1960 as it did at the beginning of the 80s.
Trump wants to impose a new 60% tariff on all imports from China and a 10% tariff on all other imports. Since tariffs are taxes paid by Americans, that would raise a typical family’s costs by $1,700 a year, according to the Peterson Institute for International Economics. Shoppers would be spending more for the same stuff, which is basically what inflation is.
…
But if Republicans gain full control, watch out.
“The upside risks to inflation appear larger under a Republican sweep,” Goldman advised. In addition to higher tariffs and more Fed-bashing under Trump, the investment bank points out that a Trump crackdown on immigration could trim the labor force, worsen labor shortages in some industries, fuel higher wages, and push prices up.
Another recent analysis by Moody’s Analytics reaches similar conclusions about the economy during a second Trump term. “The policies adopted under the Republican Sweep scenario result in higher inflation and weaker economic growth,” Moody’s Analytics found. That’s largely because new import tariffs and less immigration under Trump would force prices up and drag on growth.
…
Voters who think back on Trump’s presidency as a time of low inflation might wonder how a second term could be so different. The answer is that the COVID pandemic and geopolitical events such as Russia’s invasion of Ukraine have transformed the economy and left far less margin for error.
The United States and other nations are now “re-shoring” supply chains for key categories of goods, which should make supplies less vulnerable to shocks but also raise costs. Labor shortages for much of the last three years have pushed wages up, another factor contributing to higher prices.
Global energy markets are also much tighter than they were before COVID. Back then, American drillers and OPEC oil nations were competing for market share by basically oversupplying the market. That kept prices low. But plunging demand during COVID led to massive losses and new “capital discipline” that prioritizes profits over share. Virtually no energy producer is willing to overproduce these days, for any reason.
While inflation soared under Biden, it’s heading back toward normal levels. Many economists expect more of the same should he win reelection: continued disinflation, eventual Fed rate cuts, predictable trade policies, and moderate growth. The ultimate status quo scenario is a Biden win with Republicans controlling at least one chamber of Congress, allowing them to block progressive Democratic legislation.
Biden’s economic agenda is still a tough sell to voters, who sometimes have selective memories. Biden is battling a “Trumpnesia” phenomenon in which voters forget about Trump’s erratic handling of the COVID pandemic and other controversies and only remember that gasoline cost less than $3 per gallon. If there’s another Trump presidential term, it could generate very different memories.
https://finance.yahoo.com/news/the-smart-money-is-preparing-for-trumpflation-200215069.html
Fully aware of this and it’s idiotic
I wrote a post last night – coming up shortly
Laughable. Much TDS?
Its going to cause people to be more thrifty like rely on “makerspace” organizations due to increase in cost of imported goods ranging from appliances to computers, etc.
(due to weakening dollar and/or tariffs).
I’m still using a $150 Gateway laptop (Windows 10) bought at Walmart in the Florida panhandle in 2021 and running Linux Ubuntu. It works like a champ on Ubuntu than on Windows.
But I hope there is no trade war and it gets that drastic as far as any tariffs / import tax.
The country is going to learn more about “Necessity is the mother of invention.” even without a trade war due to various economic factors like the national debt.
I hope that technology and innovation produce enough productivity to help maintain the standard of living.
One of the variables in this messy housing is cash buyers. There is cash coming from international buyers and those in the US who see trouble ahead with possible currency controls and other politician-made problems, like a world war. People want to put cash in a safe place, like real estate, or move cash out of their country. This, in my opinion, is the reason for continued price increases even though rates are increasing. Traditional cycles in housing are being overwhelmed by this new paradigm, killing the first-time buyer or those interested in moving up in house size.
You are saying that foreigners want to move their wealth into America? That’s hilarious I fear that the most honestly
The really great thing about real estate is when you need money quick you can’t get at it.
Limited supply driving price higher. Who sells a 3% mortgage to buy into 7%?
If rates drop into the 5’s, some of those people currently “locked into” those low rates will bite the bullet and move – whether that means young people moving into a bigger home or empty nesters finally downsizing. So, lower rates might suppress home values if the supply suddenly grows considerably.
That is what my wife and I will do with a 3%, VA-assumable 30 year mortgage (mortgage balance of $145,000 and 3 bedrm/2.5 bath/2 car garage/2 miles to beach in Florida panhandle townhome price (low ball) of $300,000).
We’ll even offer to buy up to 4 discount points to lower the buyers rate from 7% to 6% so their effective mortgage rate would be about 4.5%.
We may have to move to northern Nevada (near Reno and Incline Village) to be closer to our family. That is the motivating factor.