With existing home sales collapsing to their lowest SAAR since 2010, new home sales are the only pillar left holding up any hope in the US housing market. However, with housing affordability at its lowest since at least the early 1980s, (and homebuilder sentiment slumping as mortgage rates rose), it’s no surprise that analysts expected new home sales in October to tumble 5.0% MoM (after their unexpected 12.3% surge in September). As a reminder, The Mortgage Bankers Association’s index of home-purchase applications tumbled to 120 – the lowest level since 1995 – as mortgage rates hit 8% for the first time in 23 years in October.
Source: BloombergSo, it should be no surprise that new home sales were even worse than expected, plunging 5.6% MoM (and making it even worse, the 12.3% MoM jump in Sept was revised down to +8.6%)…
Source: BloombergThe trend of downward revisions continues…
It appears the homebuilders finally hit their wall eating the gap between these two lines was just not sustainable…
Source: BloombergAnd as we noted previously, homebuilders can’t fill this gap either – between the current 30Y mortgage rate and the effective rates that borrowers are currently paying on their home loans – (i.e. subsidizing new home sales) forever…
Source: BloombergThe median new home price fell 17.6% y/y to $409,300; average selling price at $487,000
That is the lowest median price since Aug 2021, catching back down to existing home prices…
Source: BloombergIs Powell winning his war on affordability? Or crushing the middle class’s main source of wealth?More By This Author:Dear Santa, Can I Pay Later This Year?Are People Losing Interest In Black Friday?Small Bank Deposit Outflows Continue As Fed Bailout Fund Usage Jumps To Another New Record High
