Today I was interviewed by Pimm Fox and Lisa Abramowicz for Bloomberg Radio. The interview can be listened to here:
The question with the recent softness in all housing data “Is the housing market really tanking”, and the answer is a resounding no!
Before the year started, I predicted flat to negative growth in the existing housing market and warned not to over-react if inventory rose year over year. In my last two articles I said the housing market was looking just as I expected.
“For 2018, I anticipate existing home sales to be in the range of 5.27 – 5.53 million units. If we end the year showing negative growth, with rising inventory once again, don’t worry, be happy. This would be “normal” especially when purchase applications are still trying to party like it is 1999.”
Existing Home Sales Look Perfect
” I expect to see 2%-5% growth in new home sales that could go higher if the median sales price remains stable and the trend of building smaller homes continues. ”
New Home Sales Look Perfect
The take-home message is that purchase applications are at cycle highs and we have seen year over year growth in almost every report this year . Even so purchase applications are still only at 1998 levels — with the longest job expansion ever, and the U.S. is less than a year away from what will be the longest economic expansion ever, with mortgage rates below 5% since early 2011. Cash buyers contribute roughly 20% of sales today, which is double the historical number. But cash buyers have been falling in all the existing home sales reports except for the last one. If cash buyers fall substantially as a percentage of total sales we will need more mortgage buyers to make up the difference in order for existing home sales to really grow.
From Calculated Risk:
In regard to housing starts data, I previously wrote:
Nothing Wrong With Housing Starts Today
For years now I have said to wait until the years 2020-2024 to see prints of 1,500,000 for housing starts. The demand for new home in this cycle doesn’t warrant 1,500,000 housing starts, especially considering the massive over investment we saw during the housing bubble years.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami