Housing probably won’t be the spark for the next financial crisis, like it was for the last one. Rarely do consecutive financial crises have the same cause. However, that’s not to say that housing won’t get hurt and that house prices won’t fall. They will. From Tyler Durden at zerohedge.com:
For those who have been focusing on corporate earnings, the stock market and the global economy, a more ominous – if under-reported – flashpoint has emerged in recent days after some scary housing market numbers were published over the past week, or as Robert Shiller told Bloomberg, “This could be the very beginning of a turning point.”
The housing market is showing signs of a downward slide after existing-home sales were down in June, sales hit their slowest pace in eight months, and mortgage rates are on the rise, causing usually restive buyers to stay patiently on the the sidelines.
In reporting on the worrisome data released this week, Bloomberg notes that “the U.S. housing market — particularly in cutthroat areas like Seattle, Silicon Valley and Austin, Texas — appears to be headed for the broadest slowdown in years,” due to a trend of buyers “getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes, and there’s only so far they can stretch.”
Meanwhile, according to the latest Attom data, U.S. median home price appreciation decelerated in Q2 of 2018 to its slowest pace in two years. Here are some key indicators that we are indeed witnessing the start of a slowdown, published this week:
- Existing-home sales dropped in June for a third straight month. Purchases of new homes are at their slowest pace in eight months.
- Inventory, which plunged for years, has begun to grow again as buyers move to the sidelines, sapping the fuel for surging home values.
- Prices for existing homes climbed 6.4 percent in May, the smallest year-over-year gain since early 2017, and have gained the least over three months since 2012, according to the Federal Housing Finance Agency.
- Shares of PulteGroup Inc. fell as much as 4.9 percent Thursday morning after the national homebuilder reported that orders had declined 1 percent from a year earlier, blaming rising mortgage rates.
To continue reading: Housing Market Headed For “Broadest Slowdown In Years”