Supply of existing homes is at 19-year (all-time) low according to the NAR. Those are not the only headwinds.
Earlier today I noted Existing Home Sales Drop 3.6% as Supply Hits 19-Year Low. But supply is not the only issue affecting home sales.
Median Sales Price Existing Homes
Graph from Y-Charts, anecdotes mine.
Since January 2013, the median sales price of existing homes has risen by $76,200. That's a percentage increase of 44.7%. The BLS does not count this as inflation.
If you were struggling to afford a home in 2013, it's likely an even bigger struggle today.
As shown by Mortgage News Daily, Mortgage Rates are on the rise. From 2014 to 2016, falling mortgage rates added a small tailwind to housing. Since September 2016, mortgage rates offer a small headwind.
With each quarter point jump decreases affordability by about 2.5%. Meanwhile prices have been rising substantially.
Unequivocally Negative
In regards to the Recent Rate Spike, Mortgage News Daily says the "current trend in rates is unequivocally negative." Emphasis by MND.
Hurricane Spike
Existing home sales spiked in November to the best rate in years. That spike is partially an artifact of the hurricanes. Recall that new home sales are recorded at signing but existing home sales at closing. The average closing time is 45-50 days or so. Factoring in the length of time it may take to buy a home, the November spike is right on time.
Civilian Employment
Many analysts cite jobs as a strength. But jobs are a lagging indicator.
Moreover, the year-over-year percentage increase in employment peaked in October 2014.
Other Headwinds
- Trump threatens to start a global trade war.
- Student loans remain a huge problem for millennials.
- The stock market is clearly in bubble territory. If the stock market breaks hard, so will home sales.
Point three is a huge warning sign and a trade war very well could be the impetus for a major correction in the stock market.