At least the housing bubble is intact.
Existing home sales defied expectations for a decline, rising 4.3% in October to a blistering 6.85 million pace.
The range of forecasts was 6.18 million to 6.74 million, so the headline print is better than the most optimistic guess from more than six-dozen economists.
It was the fifth consecutive month of growth. The 6.85 million annual rate represents a near 27% YoY gain.
Median prices rose 16% from October of 2019 to $313,000. The market tightened, with inventories falling to levels that would be exhausted in just 2.5 months at the current rate of sales.
“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” NAR’s chief economist, Lawrence Yun, remarked.
Of course, the pandemic is in no small part responsible for what is quite clearly a new housing bubble. A constant theme in these pages over the past several months has been the extent to which the interplay between de-urbanization trends (catalyzed by the pandemic) and record-low mortgage rates (in part facilitated by the Fed) have fueled gains at a time when the broader economy is still struggling to recover pre-COVID levels of activity.
Nearly three-quarters of homes sold last month were on the market for less than 30 days.
If you ask Yun, the gains will continue. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021,” he said Thursday. I’m not sure the vaccine is actually good news for the market. Indeed, the safer it is “out there,” so to speak, the more inclined people will be to brave the cities again.
Whether or not this latest housing mania is healthy depends on your perspective. Mass de-urbanization is a death knell for downtown ecosystems across the country. The figure (above) gives you a snapshot of the situation.
I try to avoid hyperbole whenever possible (unless it’s for comedic purposes), and I’ve gone out of my way to show that there is not yet evidence to support the most apocalyptic predictions about the demise of urban living.
Still, the allure of the suburbs given i) the possibility that work-from-home arrangements are here to stay, and ii) the waning appeal of life downtown when many of the attractions are closed or curtailed, at the very least suggests things will look somewhat different for years to come.
Maybe Jeff Bezos should buy Home Depot.
October’s existing home sales print was the hottest since November of 2005.