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Sellers Have Lost Control of the Housing Market, But What About Rent?

Pending home sales, mortgage application, and asking prices all say the same thing. But it's rent, not home prices, in the CPI.
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Mortgage Market Index courtesy of Trading Economics

Mortgage Market Index courtesy of Trading Economics

Mortgage Applications at 22-Year Low

"The MBA Mortgage Market Index in the United States decreased 6.5% to 288.40 points in the week ended June 3rd 2022. It is the lowest level in 22 years as applications to refinance a home dropped 5.6% and those to purchase a single family home went down 7.1%."

Homes for Sale Climbing 

Sellers Losing Control

21% of Sellers Dropping Prices 

New Home Sales Plunge 22.5% In April, 16.6% 

New home sales have peaked this cycle and the bottom is nowhere in sight.

For discussion, please see New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions

Who's Buying? 

Mobile Homes

What About Rent?

Home prices are not directly in the CPI, Rent is. If we are building fewer houses then there is less downward pressure on rent prices.

HUD Analysis

"I'm in the HUD-insured multifamily industry. New construction projects that were in the pipeline don't work anymore, b/c of material costs, labor shortages, and financing interest rates. Rents will only climb more."

New Homes For Sale Is a Poor Measure of Supply, What's the Real Supply?

Hiousing Units Under Construction 2022-04
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The only possible savings grace for the Fed is New Homes For Sale Is a Poor Measure of Supply.

There is a record number of units under construction. That will eventually pressure rents, but when?

How Far Behind the Curve is the BLS and Fed on Rent Inflation?

National Rent Price, OERm Rent 2021-04

Because of the way the BLS calculates rent prices, the BLS is very lagging in rent supply price shocks.

For discussion please see How Far Behind the Curve is the BLS and Fed on Rent Inflation?

I suggest there will be baked in the contract cake upward pressure on rent in the CPI for the next three to six months.

Finally, please note that OER and rent of primary residence are over 31% of the entire CPI.

Adding to the misery, Food Prices are Still Rising and that's another 13.4 percent of the CPI with rising energy prices another 8.3% of the CPI. 

Like it or not, Biden's Inept Energy Policy is fueling inflation in everything that uses energy.

So good luck on the notion the Fed can destroy demand enough to quickly bring inflation under control.

This post originated at MishTalk.Com.

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