The housing market continues to be recessionary: repeat home sales edition
– by New Deal democrat
Note: there was a good advance manufacturers’ new orders report for September this morning. I’m going to save discussing it until Friday, when I dissect the regional Fed reports, which are now all in through November.
Neither building permits and starts, nor new residential sales, were updated this morning, which means that only the NAR’s existing home sales report is current, as I noted last week. What did get updated yesterday was price information for repeat home sales, by both S&P Case Shiller, and the FHFA.
On a monthly basis, the Case Shiller National Index rose 0.2%, while the FHFA Index was unchanged (note: for some reason FRED still hasn’t updated the latest FHFA data):
The above graph shows that in the last 10 years, house prices have almost doubled, while both average hourly wages and median household income have only risen about 50%. The big breakout was during the 2021-22 post pandemic inflation.
This year house price gains have completely stalled, and are still under their nominal peaks:
The same downdraft is apparent in the YoY% comparisons, going all the way back to the inceptions of the two respective series:
House price gains have only been this weak in the past 35 years in the vicinity of the two consumer recessions, and briefly during 2023. Although not updated by FRED, the FHFA index only increased 1.7% in the past 12 months.
As I always point out, prices follow sales, and this year we have seen a pronounced downturn in permits, starts, and units under construction, as well as new home sales. The market typically rebalances as inventory follows prices, and as I discussed last week in terms of the NAR’s existing home sales report, inventories continue to slowly grow on a YoY basis.
In sum, the housing market continues to be generally recessionary, and yesterday’s price reports were consistent with that scenario.
“August housing construction: even more recessionary than before,” Angry Bear by New Deal democrat
maybe its home prices and lower incomes? just saying there might be a connection there
david:
Yeah, there is a bit of that intertwined here. In the beginning NDd says such. Housing prices went up far higher in prices than salary increases percentage wise. However, look to the overall economy. TT or Trunp Tariffs have an impact on the economy. We have seen prices increase on products and services not necessarily because of a “direct” impact or a targeted impact on a product or service.
Tariffs on a few items allow other services or products without a direct tariff to raise prices also. It is not just a few imported items; it is all items affected as companies take advantage or see an opportunity.
Also keep in mind as NDd says seventy-five percent of the US Economy is service related. The other 25% of the US economy is product related. Products to the US are imports. And Trump Tariffs directly impact the imports. Non imports just follow suit.