Boockvar on ‘Frozen Housing Market Conditions’
From Peter Boockvar:
The July pending home sales figure fell 2.3% m/o/m and follows a 4.8% decline in June. The estimate was for no change. All regions fell with the smallest decline in the Midwest where the homes are most affordable.
From the NAR, “The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings. Home prices are at record highs so houses for sale are sitting on the market longer, and fewer buyers are bidding above the asking price than a year ago, though there are large local market variations.”
I’ll leave the bottom line to the CFO of Home Depot who told CNBC today prior to their earnings call that “We continue to operate in what I call ‘frozen housing market conditions.’ “
Lastly, I get asked all the time on what I think can unfreeze the housing market in order to spur more transactions. My answer is simply, ‘time.’ As affordability is the main problem, we need flat to lower home prices at the same time income growth continues well above that. We also need baby boomers to downsize. And we can also certainly use a drop in mortgage rates to a level that would be enough to encourage those with lower rates in the 4-5% range to give it up for the benefit of a new home which would add more supply. But, a notable rate drop without a coincident rise in supply and which would only lift demand, would only led to a resumption higher of home prices, offsetting the lower rate benefit.
Pending Home Sales index
Position: None
