Oil prices surge to two-week winning streak as Iran supply fears grip markets
The housing market is experiencing a widening imbalance between homesellers and homebuyers, with listings rising faster than demand. This is contrary to the post-pandemic period of extremely tight inventory and strong demand. Homeowners with ultra-low mortgage rates who were initially hesitant to sell are now increasingly selling.
As shown below, the housing market is shifting away from the homeowner-dominated conditions of the pandemic era toward one where supply is growing but qualified and willing buyers remain scarce. Rising inventory signals that pricing power is slowly shifting from homesellers to homebuyers.
More sellers than buyers does not necessarily imply a sharp decline in home prices, but it does change market dynamics. As we are starting to see, homes are staying on the market longer, price reductions are more common, and bidding wars are fading. Importantly, the imbalance reflects affordability constraints due to high prices and financing costs.
Thus, demand is constrained despite decent employment prospects and stable household balance sheets. As shown by the red rectangles, periods with more homesellers than buyers were associated with a decline in the growth rate of home prices.
Conversely, the green rectangle shows what happens when the number of homebuyers is much larger than the number of home sellers. Bottom line: expect home price growth to slow and possibly decline until there is a better balance between buyers and sellers. Please see the Tweet of the Day for more on the topic.
Bitcoin Is On The Verge Of A Bear Market
The traditional definition of a bear market for a stock or equity index is a decline of 20% or more from the peak. However, for crypto, a 20% decline is considered normal volatility. Therefore, many crypto analysts claim a 50% drawdown is the line in the sand between “normal” trading and a bear market.
Per the MacroBond graph below, Bitcoin’s recent decline is now around 40-45%, approaching the critical 50% bear-market level. If it were breached, it would effectively mark the end of the fifth bull market, which began in early 2024, and the start of a new bear phase.
US Dollar
Over the last 9 months, the US dollar has been consolidating within the blue rectangular area, as shown below. A bearish breakout of this range is potentially bullish for stocks and precious metals. However, a bullish breakout may limit speculative behaviors in equities and precious metals while pushing bond yields lower.
Currently, the US dollar index is in the middle of the band. It is approaching its 200-day moving average, which may likely prove to be resistance. However, a breakout above the 200-day moving average and a higher high may signal a bullish break from the range. Further supporting a bullish view is the MACD buy signal and the rising RSI.
The two technical indicators are close to forming a bullish divergence if they hit higher highs before the dollar index does. Stay tuned!
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