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Another Bad Omen In Tortured US Housing Market
Bad news. More bad news. More more bad news.
Pending home sales in the US dropped sharply in Januar
January is seasonally very slow and a poor indicator. Nevertheless, it is fair to say, the housing market is frozen. The turnover is just not there. This is a tell that mortgage rates are too high. Equilibrium is probably in the high 5s based on typical spreads to 10 year ust bonds, meaning they should be 100 bps lower. The equilibrium fed funds rate is also too high. Now you are talking 150-200 too high. QT needs to end asap, and the fomc needs to resume cutting rates, unless they want a hard landing. I keep hearing consumer spending is holding up. That has never been a swing factor. It’s investment/capital spending/manufacturing/housing/durables….
H-Man, we need the old people who own homes to die faster — more inventory to satisfy demand.
“Trump will fix it!” Via new tariffs on imported lumber being discussed in DC. I guess the 25% tariffs on Canadian lumber is not enough?