Wolf Street has a great piece out that really drives home the point that no matter how much of the Kool Ade you have drank, the economy is not doing well. Here is how the headline read, In the West, Inventory of New Houses for Sale Jumps to Highest since 2007. In the South, it’s Bigger than During Housing Bust. Right now, it would take roughly seven and a half months to sell the entire inventory in the South. Something to understand from Wolf’s article is this,
The median contract price of new single-family houses at all stages of construction that sold in February fell to $414,500, down by 10% from the peak in October 2022.
So, if the valuation — read sale price — is dropping, this is going to directly impact those homes which sold previously at inflated prices. And if valuations are dropping for nearly identical homes, this has the potential to rapidly put people in upside down positions. That, in turn, is a recipe for foreclosure regardless of the equity held. Regardless, and as we have stated over the previous months, with the massive federal layoffs nationwide, the more you flood the market with assets, the how low can you go syndrome becomes mainstream. Granted, good for our Industry as volume is king, but bad both for the economy and homeowners alike.
And before anyone says that, “Well, the sales are way up and that inventory is going to drop rapidly,” which is the NAR’s typical mantra, here are the real numbers pertaining to sales,
Pending home sales are a forward-looking indicator of “closed sales” of existing homes to be reported over the next couple of months. From the National Association of Realtors today, seasonally adjusted:
- In the West, pending home sales dropped further, marking the worst February in the data going back to 2011, and just above the all-time low of October 2023.
- In the South, pending sales in February rose from the all-time low in January and mark worst February on record.
- In the Northeast, pending sales dipped further, mark worst February on record.
- In the Midwest, pending sales ticked up a hair, mark worst February on record.
The numbers never lie.
