Could’ve been worse. I’ll say that much for it.
I realize that’s the same assessment I offer for seemingly every other US housing update these days, but for the life of me I can’t conjure a more accurate way to describe incrementally positive developments from an otherwise beleaguered sector.
On Tuesday, the marquee measure of momentum in the perpetually beset resale market for US homes tripled estimates, rising 3.2% MoM.
As the figure shows — and the fact that you gotta squint to see this speaks volumes — the 4.17 million annual rate counts as the best so far this year.
I’m hesitant to call this anything other than a marginally positive development. Spring buying season was mostly a bust for the second straight year, and it’s no secret why: Donald Trump’s shooting war pushed up mortgage rates and stoked uncertainty just like his trade war rattled sentiment last spring.
NAR chief economist Lawrence Yun, God bless him, tried to spin Tuesday’s release as a veritable barnburner, calling it “great news for the housing market and the economy.”
I don’t mean to be abrasive, but do me a favor and glance back up at the chart. Does that look, to you, like “great news”? It’s better than the bad news economists expected, I’ll say that. But “not bad” isn’t “great.”
Still, I don’t fault Yun for his optimism. God knows I could use a dose of whatever makes him so upbeat. “Improving affordability is helping drive momentum,” he went on, in the editorial accompanying the data.
The median existing home price in May was $429,300, the highest since last summer.
As the figure reminds you, prices haven’t recorded a YoY decline since a shallow, three-month pullback in 2023, which was small comfort for anyone who hadn’t yet taken the plunge, coming as it did on the heels of the biggest price level increase in history.
Although prices are falling in real terms — i.e., headline inflation and wage growth are outstripping the pace of home price appreciation — that’s not much help to would-be buyers struggling with the math.
Besides, there’s something tragically ironic about telling aspiring homeowners that the American dream’s becoming incrementally more accessible because gas prices are rising so fast.
Like this: “Great news! Thanks to a 40% increase in gas, home prices aren’t rising nearly as quickly as overall inflation, so every time you spend $100 to fill up your tank, just think of it as another step towards homeownership!”
I think the only question is whether the housing market will endure a long flatline, a grinding decline, or an accelerating fall. I’ll bet on the first – a 4% per annum value loss in real terms, that continues for a Lost Decade.
All you need to do to feel as upbeat as Yun is to first need a job. Then to have a job who’s description REQUIRES upbeat assessments. While I have no facts other than the persistent upbeat in the face of the most signficant transaction volume decline in history to support this assertion, I make it nonetheless. So therefore to get your dopamine hit, simply stear yourself somewhere other than a path which requires running the gauntlet. That is Yun’s secret if there is one.