Fed’s Love Potion #9! US New Home Sales In January At 1.8% YoY As Supply Jumps (As Mortgage Rates SOAR 149% Under Biden)

Confounded Interest ^ | 02/26/2024 | Anthony B. Sanders

[Kaiser8408a]

The Fed’s love potion #9: Printing endless supplies of money. But it still isn’t creating a large enough growth in new homes. The Fed’s money printing has helped drive housing prices up 32.7% under Biden, making housing unaffordable for millions of households.

But how about NEW homes? New home sales rose in January, but less than expected.

After December’s 8.0% surprise jump was revised down to +7.2% MoM, January sales rose just 1.5% MoM (half the 3.0% expected). In fact all three of the last months’ data was revised lower…

The downward revision and disappointment reduced the YoY sales growth to just 1.8%…

The total new home sales SAAR rose from a downwardly revised 651k to 661k in January (well below the 684k expected)…

Mortgage rates are back on the rise, not exactly a good sign for new home sales as homebuilders margins collapse…

Source: Bloomberg

Finally, new-home supply increased to 456,000 from the prior month, the most in over a year.

Source: Bloomberg

Is reality about to set in for the US housing market? Or will Powell step in (with a banking crisis excuse) to save all that ‘wealth’?

The total new home sales SAAR rose from a downwardly revised 651k to 661k in January (well below the 684k expected)…

Source: Bloomberg

Interestingly, the average price (NSA) soared from $493.4k to $534.3k)… which signals more higher-priced homes selling…

Source: Bloomberg

Mortgage rates are back on the rise, not exactly a good sign for new home sales as homebuilders margins collapse…

Source: Bloomberg

Is reality about to set in for the US housing market? Or will Powell step in (with a banking crisis excuse) to save all that ‘wealth’?

Of course, mortgage rates rising 149% under Biden might have something to do with it.

[SaxxonWoods]

Current mortgage rates are in the normal range. The much lower rates were a creation that couldn’t last. Get used to normal historical rates, they aren’t going away, and may go up before going down.

[Mouton]

My 1977 VA was 8%. I had worked in an S and L in processing in the 60s. They had a few FHAs on the books at 4.5% and some cal based participation loans at 6% in 65. It would be accurate to say historically the rates since 65 to 2008 have not been lower than 6%. I personally had a mtg at 13% on the way up to 18% in the early 80s. Free money arrived to bail out the banks after the loan panic of 2008. So the rates have been unjustly low for sometime. Lower the rates higher the housing prices.