New home sales were down 0.3% in Feb from an upward revision. Ignoring the revision, sales rose 0.2%. Signs of builder overoptimism are building.
New Home Sales
- Sales of new single‐family houses in February 2024 were at a seasonally adjusted annual rate of 662,00.
- This is 0.3 percent (±16.2 percent) below the revised January rate of 664,000, but is 5.9 percent (±14.3 percent) above the February 2023 estimate of 625,000.
New home sales are about where they were in July of 1963 (blue highlights).
Sales are down 35.7 percent from the August 2020 seasonally-adjusted annualized peak of 1,029.
New Homes for Sale Supply
At the current rate of sales, there is an 8.4 month supply of homes. However, the number is bogus because it includes homes for sale that have not even been started.
New Homes For Sale By Stage of Construction
Allegedly, there are 463,000 new homes for sale. But 106,000 of them have not even started.
85,000 are completed and another 272,000 are under construction. Data only dates to 1999, but the number under construction is on the upper end of the range.
Builders are optimistic they can sell the homes they have started.
The number of homes for sale and homes under construction may be flashing some serious warning signs. Both are at or above levels that preceded prior downturns.
Many of those who want to buy are priced out and have other financial difficulties.
Credit Card and Auto Delinquencies Soar
Credit card debt surged to a record high in the fourth quarter. Even more troubling is a steep climb in 90 day or longer delinquencies.
Record High Credit Card Debt
Credit card debt rose to a new record high of $1.13 trillion, up $50 billion in the quarter. Even more troubling is the surge in serious delinquencies, defined as 90 days or more past due. For nearly all age groups, serious delinquencies are the highest since 2011.
Auto Loan Delinquencies
Serious delinquencies on auto loans have jumped from under 3 percent in mid-2021 to to 5 percent at the end of 2023 for age group 18-29. Age group 30-39 is also troubling. Serious delinquencies for age groups 18-29 and 30-39 are at the highest levels since 2010.
Generational Homeownership Rates
The above chart is from the Apartment List’s 2023 Millennial Homeownership Report
Those struggling with rent are more likely to be Millennials and Zoomers than Generation X, Baby Boomers, or members of the Silent Generation.
The same age groups struggling with credit card and auto delinquencies.
Conclusions
Two different polls show millennials and zoomers are unhappy. And they are unhappy for the reasons I stated.
Many have concluded they will never be able to afford a house or have kids. Those who have concluded that are likely correct.
For more discussion, please see US Drops to Number #23 in the World Happiness Report
Are we about to run out of people who want a home and can afford a home?
Residential real estate should’ve collapsed along with the CRE market but the Black Rocks of the world have kept it propped up as well as buyers of hard assets. As inflation continues it debasement of the currencies in the West, hard assets will continue to be bought.
Once unemployment starts to rise at the end of May, residential real estate will begin to precipitously head down and continue its trajectory downward for some time, probably at least a year. Lower rates will not rescue the residential market because Powell can’t lower rates due to inflation IF the FED is data dependent. But if Powell opts to be one of the three blind mice regarding the evil economic information coming out about stagflation during rising unemployment the lag effect still trumps the lower rates effect for overall asset markets.
Builders are too optimistic.
Democrats along with mainstream media got to “hold it together” at least until October.
Texas Governor who believes in “free markets” wants to cancel them in real estate.
link to hoodline.com
With an eye on the ongoing national crisis over housing affordability, Abbott took to social media to push for change. “I strongly support free markets,” Abbott posted on site X, “But this corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home. This must be added to the legislative agenda to protect Texas families.”
Corp owners have write-offs on Schedule C. Not Schedule A or E. Start there.
It’s not a free market when corporations like Black Rock can borrow newly created money at absurdly low interest rates before the rest of us and then use it to buy up assets. Central banks don’t exist in a free market, and neither do the hogs like Black Rock who feed at the Fed’s trough. You’ll own nothing and be happy.
New home sales : H&S ? In construction privately held 5+ units : 966K, down from
1,001K in July 2023 and above 900K in July 1973, before a 50Y decay.
roach motel still paying 5.375 percent.
Last week a roach motel regional bank gave me 6.27% within 2 days. I got out before the market took it from me.
Florida real estate disaster zone….
link to finance.yahoo.com
Over the last several decades, retiring and buying a condominium in Florida has been a rite of passage for millions of Americans entering their golden years. Unfortunately, a combination of high insurance rates, high homeowners’ association fees and high interest rates is scaring off buyers and turning Florida’s once highly vaunted condominium market into a disaster zone.
Texas if doing far worse. Watch youtube Reventure Consulting latest video. So much for the magnificent red states where “everybody is moving to…”.
Most multi in constructions 5+ units are in the flyover areas and in the south. In recession those who bought a few years ago, when mortgage rates were 3%/4%, might have liquidity problems. The 5+ units might plunge like 5 decades ago, after LBJ and Nixon bubble. Most multi were financed by the gov, not by the regional banks. The landlords and the builders herd together imitating the gov tsunamis. Biden wants to add 2,000,000 units and to renovate the old ones from the 60’s and 70’s.
From what I’ve read, the HOA president for Champlain Towers South in Surfside, FL quit when he could not get the owners to approve a special assessment. Shortly after that, the condo collapsed.
If I was the insurance company, I’d cancelled their policy if it was that bad. The last condo we lived at in Panama City Beach about 5 years ago, had an annual inspection by an engineer and also general contractor sent by the insurance company. They even picked us apart on missing inspection tags for fire extinguishers, besides checking the roofs and the roof clips / straps (from inside the attic).
Three years ago, after a year of badgering, I convinced my son and daughter-in-law to sell their house. They have my only grandchild, who I watch Monday to Friday during work hours. We bought one big house in a much nicer neighborhood. Most of the driving for me went away, as I only take her to and from school, and I do my shopping on those trips. Being retired helps. Multi-generation homes are the answer to high prices.
Exactly. This was how things worked up until sometime after WWII.
that is what family is about …no different than The Waltons
Existing and new sales are strong in my neck of woods (in California). Things aren’t out of control on prices and offers.
Homeownership is not a right and neither is having kids.
Many Boomers we know, in their Early to mid-80’s, are about to dump their homes due to DEATHS, sicknesses or down-sizing.
8 of them are already moved. Two other couples have sick spouses and will no longer need their homes (My In-Laws are one of those couples)….
I think the baby boom generation begins just after WW2. So the very oldest would be around 77/78. I was born in 1951. Am currently 73.
Boomers are not likely to buy a smaller house if they sell. Definitely not a large one. They will cash in and buy bills, notes, high grade munis, or CD. There is no reason for buying a house before they expire within few years.
They have to live somewhere. If it’s not a home then it’s a condo or apartment or assisted living.
Depending on availability and cost of each of those it may be cheaper to simply stay put and have everything delivered. My parents have toyed with the idea of selling their home and moving to some quasi assisted living or just a condo. But when they priced out the cost of moving plus cost of those places (esp with their HOAs and meal services etc) they found it was cheaper to remain in their home (that’s with someone hired to do the yard, a once a week laundry service that picks up/drops off and a once a week maid service plus delivery of food/items from Walmart or Amazon).
Today’s boomers will find it easier than ever to remain in their large home thanks to all kinds of services being available now that didn’t exist 20+ years ago.
I wonder if there are other issues about homebuying than just price and affordability. What about trepidation, fear of the future, thoughts of moving from social “progressive” blue states to red states? According to the LA Times, 40% of California residents last year thought about leaving the state entirely. This must hold true elsewhere too.
Biden is terrible.
link to dnyuz.com
Orange County, CA existing home sales are very strong. Why? Because the new homes are too far away from job centers. Work From Home is dead.