Today the NAR reported that existing home sales came in with a slight beat of estimates at 4,330,000 a 17.2% decline year over year.
From the NAR:
Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums, and co-ops, dropped 17.8% from March to a seasonally-adjusted annual rate of 4.33 million in April. Overall, sales decreased year-over-year, down 17.2% from a year ago (5.23 million in April 2019).
“The economic lockdowns – occurring from mid-March through April in most states – have temporarily disrupted home sales,” said Lawrence Yun, NAR’s chief economist. “But the listings that are on the market are still attracting buyers and boosting home prices.”
For many years I have talked about years 2020-2024 being suitable for housing as that is where the demographic patch kicks in and mortgage rates should low. Obviously, Covid19 has infected the U.S. economy with lockdown protocols to impair this story. However, what the virus can’t kill off is the most significant housing demographic patch ever recorded in U.S. history, which will walk the earth freely one day. One data line still concerns me, and that is the price growth that we saw in this report, which might shock the tremendous American housing bears of the past 7 years. A lot of these excessive housing bears are anti central bank trolls who believe rates or inflation will take off destroying America more than this virus. Well, let’s just say Housing Bubble 2.0 Troll Camp USA was wrong, but the one area of concern I did have for years 2020-2024 was that home price growth could accelerate during this time frame because demand would be too strong, housing tenure to high and rates wouldn’t go high enough to cool off pricing.
I am not a big fan of this data line at all.
Record High Home Prices $286,800
7.4% Price growth YoY is too strong
Last year we had negative real home price growth, and it made me very happy to see that kind of an action because it creates a more sustainable housing market. As you can see below, we have nothing that reminds us of the real home price growth from 2002-2005, so stop using the housing bubble 2.0 thesis.
Regarding purchase application data. We had a 35% crash in purchase application data on a YoY basis and then a 33.5% increase in the last 5 weeks on a YoY basis, which means we are one week away from being positive year over year again.
2020 BC ( Before Coronavirus) average growth + 11.6% YoY. March 18th was the last positive weekly year over year print we had.
AD ( After The Disease) Data –
AD average is – 20.5%
From my brother from another mother, Len Kiefer, a must-follow on Twitter for those who want housing data.
My best advice is the same advice I have been giving for some time now. Take the March, April, and May data with a grain of salt; it is too wild. Wait until July 15th and take a look at all the data for June that will be coming out to get a more smooth take on housing data to work from.
We can still have a normal year, which to means sales above 4,600,000 because the virus is destroying the economy, but housing has a set of different variables. I went into that here in my recent article for HousingWire.
HousingWire Article: Can We Still Have A Normal Year In Housing?
Jobless claims still look terrible, 38.6 million Americans have filed for jobless claims in a very short time. As I have talked before in other articles, 46% of all jobs in America are at risk of being laid off, and the unemployment rate should get between 24.2% -27.8% before bottoming out. A lot of this, of course, is a moving target with a duration of lockdown protocols.
Going out for the rest of the year, please don’t underestimate the power of this virus. As you can see above, we are creating some of the worst economic charts of our lifetime, and over 93,000 Americans have died. This virus didn’t just go away, so be careful out there as we are reopening our economy.
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 Facebook page https://www.facebook.com/Logan.Mohtashami and is a contributor for HousingWire.