Jesus Christ.
That’s a two-word summary of Tuesday’s housing market updates out of the US economy, where households are either the most depressed on record or “euphoric,” depending on who you’re inclined to trust, the nation’s most respected consumer sentiment poll or Kevin Hassett. (Hold that thought.)
Contract activity for existing homes plunged 7.3% in September, the NAR said. That’s among the largest declines in years. Consensus expected… you know what? It doesn’t matter. Not that. Economists didn’t expect that. But they damn well should’ve, because household sentiment’s in the dumpster (which is on fire) and mortgage rates rose ~60bps last month.
As the figure shows, 66 on the NAR gauge is a new record low and that’s really, really saying something. Because we’ve seen some bad prints on that gauge in recent years.
The NAR’s habitually chipper chief economist Lawrence Yun suggested rates could be “topping out,” but admitted that “fast-rising” financing costs are an albatross. “Although job growth and income gains can support home purchases, housing affordability is more affected by changes in mortgage rates,” he remarked.
Meanwhile, government data showed the pace of overall new residential construction was the second-slowest since the onset of the pandemic in September. The 5.2% MoM decline on the housing starts headline made for a stark contrast with consensus, which expected a gain.
As the figure shows, single-family starts likewise fell. At just 859,000, the seasonally adjusted annual rate was the second worst since March of 2023.
The numbers are disappointing but hardly surprising: Builder sentiment’s only been worse in the aftermath of the GFC and during the 1990-1991 recession, according to Monday’s (absolutely abysmal) update from the NAHB.
Recall that the NAHB headline maps very well onto new, single-family construction for obvious reasons. Consistent with the NAHB readout for October, the single-family permits series in Tuesday’s government release fell to 845,000, the slowest annual pace in 39 months.
There were no silver linings to be found in Tuesday’s housing market releases, unless you count the notion that the bar for things to get worse is now very “high.” And that brings us full circle to Hassett’s widely-lampooned “euphoria” characterization, delivered during a CNBC cameo earlier this week.
Kevin is a wellspring of prescience, even if it sometimes takes a while for his predictions to pan out — and assuming you can cope with a little volatility in the meantime. For example, he predicted the Dow would hit 36,000 21 years before it actually did.
So, if you’re not feeling especially “euphoric” right now, give it until 2050 or so. Good things come to those who wait. And patience is a virtue.
High-rates kill housing and the surrounding support industries, and don’t help auto sales, so take away the data center boom and the rest is a dumpster fire.
I’m trying to connect the economic dots but just can’t get there. Assume that the AI miracle reaches 75% of the prophesized euphoric goalposts. How does that help the bottom leg of the K economy. Does it fix the housing crisis, does it raise wage gains for most faster than inflation, does it provide a blue collar worker with a new 6 figure job? Musk and the rest of our oligarchs will add billions to their net worth (100 for me, 1 for you). What’s left to trickle down to the bottom 50%. If they do get something, they’ll have to spend some of it on new phones, tablets and computers with the requisite faster chips and memory needed to run the AI miracle. In the last 2 months alone I’m being inundated with AI content and it’s very cookie cutter, not creative and filled with silly mistakes. If you’ve noticed, every business wants you to interface not through the web browser but through their own app. The interfaces are all over the place adding significant user time to what used to be a lot simpler. “Dear Lord”
At the root of the K-shaped economy there also appears to be a K-shaped availability of credit. If you are an AI company, a government, or in the top 10%, affordable credit can still be had. If you are a small business, a farmer, or any of the rest of us, you can just go pound sand! I’m afraid the housing market will only get worse before it gets better, as there are currently no credible plans to save it, and a long anticipated (from inside the industry) wave of foreclosures is just beginning to materialize. Two wars, oil prices, and all of the hype surrounding AI, semiconductors, and data centers, have perhaps distracted us from the fact that housing, in all respects, is still a very big (and very tangible) part of the U.S. economy.
Anyone who owns a building or two is just like the farmers at the castle gates with pitchforks. They will throw a bone able bodies ones give them a suit of armor, a license to steal and then you will be fighting them too. If you thought you were going to get rich from those tax write-offs, well you were just the Cannon fodder that is put out on the field for the enemy to take out.
Additionally, this is no longer just about rising mortgage interest rates. This is about a lack of confidence in future earnings.
That is a really good observation on the proliferation of apps. I have been looking into going app free but I need to study the effects of that on daily needs. Some things like car charging is virtually app only.
I don’t think it is possible to go “app free”.
I often find myself spending significantly more time on relatively simple tasks that used to take me a matter of minutes, which now can stretch out over hours and even days.
Recently, I wrote a check to contribute to my HSA and drove to the bank to make a deposit. Due to complications that I wasn’t aware of resulting from my regional bank being acquired by a national bank earlier in 2026, it turned out that the entity holding the HSA was no longer the bank.
I drove back home, downloaded the app from the financial institution that now holds my HSA and after numerous “authentication” attempts that didn’t work because they had somehow gotten my email wrong, I called the “contact us” phone number, listened through 9 prompt options and finally got to a human ( I was thrilled!). Then, after answering multiple questions about myself, they sent me a new link to download the app. They also informed me that the only way to fund my HSA was by bank transfer and I could set that up, once I downloaded the app. I did all that and made the transfer (sadly, I had to write “void” across the paper check- and I also realized I had only written 3 checks in 2026). Weirdly, after I completed all that, I never received a confirmation, but I figured it would show up the next day. The next day, I logged in, the deposit didn’t show up, so I called again and was told that it takes 3 days to show up.
Good thing I have a dark sense of humor, because I can’t believe in 2026, they need 3 days to complete a bank transfer (haha).
Hopefully, when I log on again later today, I will see the correct number on a screen, which supposedly represents my money that I can use for health maintenance tax free!, which thankfully, I don’t need.
No, I don’t think it is possible to go “app free” and this can definitely be way less efficient than “the old ways”.