The National Association or Realtors reports Existing-Home Sales Expand 1.4% in June
That is from a negative 0.3 percentage point revision. The lead chart puts sales into a better light. The key data is price and speed.
Key Details
- Existing-home sales rose 1.4% on a seasonally adjusted annual rate from May to June, with no region showing a sales decline.
- The inventory of unsold homes increased 3.3% to 1.25 million from May to June – equivalent to 2.6 months of the monthly sales pace.
- The median existing-home price for all housing types in June was $363,300, up 23.4% from June 2020 ($294,400), as every region recorded price jumps. This marks 112 straight months of year-over-year gains.
- The price increase is the second highest level recorded since January 1999.
- Homes on the market typically sold in 17 days.
- Eighty-nine percent of homes sold in June 2021 were on the market for less than a month.
By Region
- Existing-home sales in the Northeast increased 2.8% in June, recording an annual rate of 740,000, a 45.1% rise from a year ago. The median price in the Northeast was $412,800, up 23.6% from June 2020.
- Existing-home sales in the Midwest rose 3.1% to an annual rate of 1,330,000 in June, an 18.8% increase from a year ago. The median price in the Midwest was $278,700, an 18.5% increase from June 2020.
- Existing-home sales in the South were unchanged from May, posting an annual rate of 2,590,000 in June, up 19.4% from the same time one year ago. The median price in the South was $311,600, a 21.4% climb from one year ago.
- Existing-home sales in the West rose 1.7%, registering an annual rate of 1,200,000 in June, a 23.7% jump from a year ago. The median price in the West was $507,000, up 17.6% from June 2020.
Median sales price does not take size or features into account. The Case-Shiller report is a price measure of repeat sales of the same house. The next report may be interesting.
Until then, note that Corelogic Reports a 6.6% Increase in Single Family Rent Prices.
As discussed in the above link, BLS price measures are more than a bit suspect.
Mish
QE as always been about avoiding an asset price slump and
the only to do that was to lower interest rates to ridiculous levels and to
manipulate the bond market. The Japanese bubble was the example they wanted to
learn from and above all not to allow deflation to set in so when the 2008
bubble popped they immediately went into QE instead of waiting as did the
Japanese. Real estate and stock prices declined sharply but then stabilized
relatively quickly. When the Japanese bubble broke stock and real estate price
slid downward for 18 years before hitting bottom. QE did work for the US in
that it avoided the deflation spiral but the cost was anemic growth and what
growth there was concentrated in a few mega-metropolises. It took a long time
for the economy to recover but it did and by the time Trump came around it was
getting into a much better shape. QE was flawed and the deficit rose but it was
much better than doing nothing. Thanks to Japan the Fed already had an example
to avoid and a roadmap to avoid it.
In 2020 there was no examples to study and no roadmaps to
follow. It literally came out of the blue. All we had were a few studies of
hypothetical scenarios. The CDC had a detailed plan which although public was
clearly not read by any commentators and media pundits. The 78 page plan was
good but it had one fatale weakness and that was it required the cooperation of
local officials in preventing demonstrations, looting and generally any
gathering of http://people.to cut the transmission. This weakness was not a surprise
and frankly it was considered Plan B anyway considering the low death rate of
the virus. Instead Plan A was put into action.
Plan A was Operation Warpspeed which was a military
operation and the COO was General Gustav Perna who is the top military
specialist in large-scale logistics. It worked very well as did the Manhattan
Project which also was headed by a general specialized in large-scale
logistics.
The economic Plan A since there was no roadmap was to go for
broke and worry about the fallout afterwards. It was as if we were suddenly at
war and that it was existential because it was. The government asked for gobs
of money to fund the Warpspeed project and to pay people not to work and
Congress immediately gave it to them. Consequently the economy after taking a
sharp drop was able to recover quickly because people had money to spend in
their pockets thanks to the government and were therefore more optimistic. If
the money had not been voted and disbursed we would have been in a deep
depression by now.
The surge in property prices is a sign of optimism,
misplaced perhaps when it comes to prices but a depressed population wondering
how they are going to survive does not buy high-priced real estate. They save and
do not spend. Lots of people are still out of work so now is not the time to
turn to austerity. We have an asset bubble caused by the Fed for sure but I ask
you would you have them do? Raise rates high to break the bubble and cause
deflation? Cut spending to contain the deficit and see unemployment skyrocket? In
life you figure things out as you go along. Some things your parents taught you
may no longer be relevant so you adapt. The Fed is in the same situation. We
are in unprecedented territory because the situation changed and have to figure
things out as we go along and we will. I have no doubt about that.