Last week, we observed that delusion and hope can only last so long (even when one’s salary depends on it) as US homebuilder confidence crashed to COVID lockdown lows in November after failing (or refusing) to see what was obvious to everyone for months, and what homebuyers were clearly feeling as prices soared along with mortgage rates and record low affordability for most Americans. And don’t get us started on homebuyer confidence: just look at the red line below which has taken out all previous record lows (including the post-2006 housing bubble) and is hitting new record lows every single month…
Well, slowly but surely this epic collapse in sentiment is spreading to market metrics, and while it will take between 6 and 9 months for real-time data to reach the badly lagging government-level CPI and PCE data, what’s taking place in the US housing market right now is nothing short of a meteor strike, with RedFin reporting in its latest market forecast that pending home sales fell the most on record in October and deal cancellations and price cuts hit record highs as buyers were spooked by the biggest mortgage-rate jump in over four decades.
I can only feel bad for those fools that ran out and paid way over asking price for a house that has dropped 40% in value in the last year.
Thanks, Biden, you POS!