Housing Market Slowdown
Existing home sales are on the wane. Analysts seem to have been taken surprise by this! (I could have told them; if interest rates keep going up, no one is going to be able to afford the kinds of prices we've seen.) It's certainly no surprise that if interest rates keep going up, sales will go down. After all, affordability of homes is at an all time low in some areas.
The chief economist of the National Association of Realtors is concerned that the Fed will continue to raise interest rates to the 6 percent level. If that happens, mortgages should be approaching 7.5 percent to the consumer. This is predicted to be the point that will tip the market from its current more balanced position (prices are leveling out or falling only slightly) to a definite downturn. In other words, keep raising interest rates and, instead of a soft fall, we get a hard landing.
I still say that someone has to get this news to the US government. Why the heck is the government (at multiple levels) still singing the praises of tax cuts and such (which are inflationary) when the Fed is doing everything possible to control inflation? Do these folks talk to each other? Do they read newspapers?
While it is a bit of a concern that existing-home sales are down 11 percent from last year, it is much more alarming that total housing inventory levels are at the highest inventory of unsold homes in 13 years. That means that we've got more houses on the market than we did at the end of the last recession in housing.
It could be the best indicator of where the market is going.