Morning Report: For-sale home inventory hits a record low

Posted on January 20, 2022 by Brent Nyitray

Vital Statistics:

 LastChange
S&P futures4,55026.2
Oil (WTI)86.57-0.43
10 year government bond yield 1.83%
30 year fixed rate mortgage 3.76%

Stocks are higher this morning on no real news. Bonds and MBS are up.

The NASDAQ is officially in correction territory (down 10% from its peak). It is the old adage: Don’t fight the Fed. BTW, the March Fed Funds futures see a 90%+ probability of a rate hike. A month ago, it was only a 43% chance.

Initial Jobless Claims rose to 286,000 last week. I would assume the increase in Omicron cases drove the increase, but if the labor market is softening, the Fed has a big problem on its hands. The labor force participation rate is still well below pre-pandemic levels, which can act like a brake on the economy.

Applications for new home purchases slowed in December, according to the MBA. “Applications to buy a new home slowed in December, while the activity remained tilted to higher-priced homes,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Supply chain challenges, labor shortages and higher materials costs also contributed to last month’s decline, as projects were delayed or cost more to complete. The average loan size set another survey record at $423,102, as these higher costs are pushing sales prices higher.” 

Existing Home Sales fell 4.6% in December, however 2021 was the best year since 2006. The driver of the decrease was inventory again, with only 910,000 homes for sale. This is down 18% from November and 14% from a year ago. This is an all-time low for the series, and represents a 1.9 month supply.

The median home price rose 16% YOY to $358,000. NAR is predicting that home price appreciation will slow to 3% to 5% this year as rising mortgage rates crimp consumer demand. It also sees homebuilding picking up in 2022 and 2023.

IMO, the supply and demand imbalance will be the driver of home price appreciation, not mortgage rates. Rising incomes will offset the increase in rates (in other words, DTIs aren’t going to change all that much), and professional investors will still find these assets attractive, certainly compared to what else is out there.

Filed under: Economy |

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26 Responses

  1. Let the mutherfuker burn!, on January 20, 2022 at 9:52 am said:

    The Republic is saved.

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    • ScottC, on January 20, 2022 at 10:37 am said:

      Actually he did insult at least one journalist. In response to the question about him previously suggesting that anyone who opposes the Voting Reform Bill is akin to George Wallace or Bull Connor, he falsely denied that he had and then chided the questioner, sarcastically implying that he doesn’t understand English. He said:

      “That is an interesting reading of English. I assume you got into journalism because you like to write.”

      That seems like an insult to me.

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      • Brent Nyitray, on January 20, 2022 at 11:02 am said:

        It is so amazing the left thinks they can just lie in their bubble and no one will pick up on it.

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        • Kevin S. Willis, on January 20, 2022 at 4:22 pm said:

          Well, because it’s mostly worked that way–or enough of it has worked that way–for 30 years, if not forever.

          When no attempt to expose or get some traction with their lies actually works, the general sense will be there’s no accountability, whatever you say will be fact, its all good. And you just might keep going further and further, not thinking there as any point where your lies can get so outrageous that you stop getting a complete pass from everybody.

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      • jnc4p, on January 20, 2022 at 11:17 am said:

        There was a great comment on Matt Taibbi’s most recent piece where the guy really captured Biden’s rambling style:

        “hakuin
        22 hr ago

        Interesting commentary, Matt. Perhaps a bit too harsh on my good friend Sen. Bardon . . . Sen. Biden . . . President Harris, my good friend President Bison. I’m from South Dakota. And bison are good people. If you don’t vote Democrat, you aren’t a true bison. I visited Sitting Bull when the U.S. Cavalry had him imprisoned. And that is why it is temper . . . temple . . . temeraneous . . . imperative that we pass the voting rights act NOW! But to emphasize my point, I remember years ago when I was driving a rig on I-35 in South Texas, heading to the border to pick up a load of illegal aliases . . . lassies . . . lettuce, to drive that stuff back up to Kansas and spread good will to the people of that fine state . . . I’m from Kansas, so I know . . . in fact, I reached across the aisles to Glinda the Good Witch back when she represented the south , and I brought compromise. And that’s what’s needed for our country now. Lettuce. But I’m being told by my advisor/wife right now to let you know . . . c’mon, man. You’re either for us, or you’re a Bull Corner . . . corn hole . . . corn pop. President Harris was elected to untie . . . tie . . . tinus . . . Johnny Unitas us. I know this because I played in Super Bowl III. I tossed the coin at the beginning of that game, and it was the fairest toin . . . foil . . . sploin . . . penny toss-up ever in the history of the NBA. So, get REAL, Mack . . . Mart . . . Mank. I’m a subscriber.”

        https://taibbi.substack.com/p/joe-bidens-awesome-first-year/comments

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        • ScottC, on January 20, 2022 at 3:28 pm said:

          Yeh I read that one. Was pretty funny. I also noticed that Brent got a shout out from Taibbi himself.

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      • Kevin S. Willis, on January 20, 2022 at 4:20 pm said:

        Anyone who harasses our noble and esteemed President in that manner is NO REAL JOURNALIST!

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    • Kevin S. Willis, on January 20, 2022 at 4:19 pm said:

      The arrogance and entitlement of the press will never cease to amazed me.

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  2. jnc4p, on January 20, 2022 at 11:04 am said:

    Good read from the NYT actually:

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  3. jnc4p, on January 20, 2022 at 12:21 pm said:

    Worth noting:

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