Fear for US housing market

Just 2.5% of homes in the US changed hands this year in the first eight months

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Fink Money
November 01, 2024 • Estimated Reading Time: 4 minutes

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Since it’s the UK Budget week, I think it’s relevant to hammer home the point about what is being GLARINGLY missed by many…

And this morning, I wanted to drop a short video from TikTok explaining how the mechanism of QE translates to the Bank of England robbing you blind!

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If we want to talk about things being unreported, we really need to look at the US housing market.

Back in September, we found that only 2.5% of houses changed hands year to date 2024, the LOWEST number in 30 years.

That says something.

Even amidst the huge wealth increase in the US, people just aren’t really interested in buying houses at these prices.

Back in September, lower mortgage rates were supposed to boost US home sales. Rates were falling in anticipation of the Fed’s cutting cycle…

Instead, mortgage rates are back up to 7% and the US housing market continues to slow...

Homebuilders such as D.R. Horton had taken advantage of the 'frozen' resale market by using ‘rate buydowns’ (essentially subsidising the mortgages) to lower lending costs and incentivise buyers to buy new homes.

Now even that tactic is becoming less effective.

The homebuilder missed on revenue & home delivery estimates, their share price fell by 11% in October.

There's huge risk that the market is focusing far too heavily (hysterically?) on upcoming political events, while ignoring the fact that a large chunk of the US economy is seriously struggling with longer term interest rates at these levels…

Now we know what Trump is like…

He will come in and say interest rates are too high!

He will care about inflation to an extent, but he gets the game — he will suggest that inflation was largely a supply side event, stemming from energy, Russia and the Middle East.

Could he get away with pressuring the Fed to do his bidding if he were to be elected?

Perhaps, who knows?

But I do think a Democrat win is likely to cause a bit of a support in the inflation rollercoaster leading to the rate cut path being elevated.

Could this mean still stagnant trading in the housing market?

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