Home sales

Existing home sales data continues to outperform

However, before getting into this report, I need to explain why so many people missed out on this surge in demand in the second half of 2021. It’s the same reason I’ve given for many years: American bears hosting generally addicts can I do not read the data correctly, and the mortgage purchase application data just proved my point once again.

Earlier this year I talked about how shopping app data would be negative year over year in the second half of 2021 due to makeup demand in 2020 creating abnormally compositions high. As a rule, volumes always drop after May, but of course 2020 was an abnormal year.

Knowing that the real estate crash addicts on Youtube, Twitter, Facebook, and clubhouse would incorrectly push the negative year-over-year data rotation, I wanted to get ahead of that narrative. Then everyone went crazy for investors and iBuyers, suggesting that these people were holding back the whole housing market. I understand the scammers need to keep the scam going, but even the Joker wouldn’t say that the housing market lives off investors and not mortgage buyers.

What happened is that the shopping app data pushed up the year-over-year data significantly from 16 weeks ago. So for four months this line of data got better and better, and so many people ignored it because they didn’t know where to look. Since September, we’ve had a double-digit year-over-year growth trend, which is a big deal in this line of data as the data was still showing negative year-over-year growth. .

This would have been easy to spot if you had made COVID-19 adjustments to the data and recognized that the year-over-year declines were much smaller. Now we can see why existing home sales, pending home sales, builder confidence, housing starts and housing permits are looking better towards the end of the year: we are back to that level of 300 in the MBA index which I have often spoken about.

As you can see below, we don’t have a booming mortgage market like we saw from 2002 to 2005; we have a constant demand for replacement buyers. In 2020-2024, we just have this kick of the largest housing demographic patch ever recorded in history, as 28-34 year olds are the tallest in America and need a place to live. You don’t need to get any more complicated than that.

All of this information was available for people to read in the Census data – they were not hidden. I can understand if it was the 1500s and you had to send horses out for information that might reach you months or years later. However, it is 2021. We have the internet, access to census data is open to the public, and reading is good.

That’s why I always insist on my two rules when I talk about economics:

  • Economy well done, should be boring
  • You always want to be the detective, not the troll.

Whoever predicted a housing crash every year from 2012 to 2019, then went all-in in 2020, only to double in 2021 and push for a second-half crash in 2021 — you’ve all lost your privileges to talk housing ever.

Now on to the report and some details from NAR.

door-to-door sales

From NRA: Total existing home sales completed, including single-family homes, townhouses, condominiums and co-ops, rose 1.9% from October to a seasonally adjusted annual rate of 6.46 million in November.

As noted, sales trends are now above my 6.2 million level for three straight months, matching the best mortgage demand growth we’ve seen for four months. Typically, shopping app data lasts 30-90 days, and we know we’ll be dealing with COVID-19 comps through mid-February. One last thing with existing home sales, our top impression sales from the previous year, this year, and even the previous expansion all happened in winter and fall, not spring or summer. This is a fact that few people consider.

Home prices and days on the market

From NRA: In November, the median existing home price for all housing types was $353,900, up 13.9% from November 2020 ($310,800) as prices rose in every region, the pace highest appreciation being in the South region.

For every positive, we have a negative, and as we can see, the housing world is just different in the years 2020-2021 than what we saw from 2008-2019 regarding house prices. While the growth rate or prices are slowing because we don’t have a housing credit boom, the price increase in the first two years of my 2020-2024 period has hit my growth comfort zone cumulative price of 23%. Higher mortgage rates would create more days on the market, but that would mean the 10-year yield would exceed 1.94% with duration in 2021, which was not part of my forecast in 2021 and 2022.

A positive outcome for me in 2022 would be to see the days in the market move past the teenage years. More choices are better for buyers and sellers who generally need to buy a home.

From NRA: First-time buyers accounted for 26% of sales in November; Individual investors bought 15% of homes; Cash sales accounted for 24% of transactions; Distressed sales accounted for less than 1% of sales; Properties generally remained on the market for 18 days.

Now for the real bad news, which is still a first-world issue, but the big concern for me during 2020-2024: inventory.

The seasonality has already started with the inventory, which is expected every year. However, I had hoped that we would not start spring 2022 with historically low stocks. Unfortunately, this can no longer be ruled out and we could have a chance of hitting a new all-time low in the spring of 2022 with mortgage rates still below 4%. Ouch!

The target level for me to stop talking about how unhealthy this housing market is to see inventory levels between 1.52 – 1.93 million. While still a lean inventory, it will bring more balance to the market, and I can call it a B&B market: boring and balanced. Until then, it’s still the hunger games for housing.

As we end the year on a high note and still have one month of existing reporting left, we can clearly see that housing is driven by demographics and mortgage rates and those who have driven the terrible stories of Forbearance Crash didn’t even get coal for Christmas.

If you’d like to read more about my 2022 Economic and Housing Forecast you can find it here, or if you’d rather listen than read, I’ve provided a preview of the forecast in this episode of the HousingWire Daily Podcast.