This video and the Housing article published on June 28th solely focuses on “existing” home sales painting a negative picture for the housing market. “Existing” home sales are down because these homeowners have much lower mortgage rates locked in for 30 years. If they were to sell their “existing” home with a 3% rate they must buy at a 7% mortgage rate. This is why “existing” home sales are down, but the other side of housing, “new home sales” are up month over month due to the shortage of new homes.
I agree increasing rates will put significant pressure on the housing market overall, but the economy is showing a significant shortage of “new homes” and this side of the housing market is showing extreme strength. Month on month new home sales are up not down, building permits are up, housing starts are up, construction spending is up. https://tradingeconomics.com/united-states/new-home-sales
XHB – homebuilders ETF is breaking out
ITB – home construction ETF is at all time highs
Owens Corning – all time highs
New Home Builders – Pulte (PHM), D.R. Horton (DHI), Lennar (LEN), KB Home (KHB), Toll Brothers (TOL) are all at extreme highs
After reading the June 28th housing article and watching this video multiple times, I am not sure what the key takeaway is.
All of these are good short candidates (6-18 months time frame)
XHB, ITB, Owens Corning, Pulte (PHM), D.R. Horton (DHI), Lennar (LEN), KB Home (KHB), Toll Brothers (TOL)
People sell houses because of following reasons- Death- Divorce- Job / Income Loss- Kids school / CollegeThese are longer term cycles and always catch up to the shorter time cycles (Covid home buying and equity in house) … The increase in new home construction is going to help increase the market glut and price declines.
Don’t look at existing home sales, look at home prices. Even though the existing housing inventory is low and the home prices are declining.
Have you ever seen something that is low in supply and high in demand and still the price declines??? Look at the forward looking indicators.
I expect a decline in new home sales in Q3 and Q4. And a continuous price drop for US housing. The following can help increase the pace of price drop
Jobs Data / Higher for longer / Inflation Oil and gas prices / Geopolitical issues
I expect with Higher for longer rates, Jobs and Inflation data the rate of home sales (new and existing). and home prices will keep on declining. I expect a divergence between the rate of change of interest rates and rate of change of decline in home sales which will be resolved with a recession.
This video and the Housing article published on June 28th solely focuses on “existing” home sales painting a negative picture for the housing market. “Existing” home sales are down because these homeowners have much lower mortgage rates locked in for 30 years. If they were to sell their “existing” home with a 3% rate they must buy at a 7% mortgage rate. This is why “existing” home sales are down, but the other side of housing, “new home sales” are up month over month due to the shortage of new homes.
I agree increasing rates will put significant pressure on the housing market overall, but the economy is showing a significant shortage of “new homes” and this side of the housing market is showing extreme strength. Month on month new home sales are up not down, building permits are up, housing starts are up, construction spending is up.
https://tradingeconomics.com/united-states/new-home-sales
XHB – homebuilders ETF is breaking out
ITB – home construction ETF is at all time highs
Owens Corning – all time highs
New Home Builders – Pulte (PHM), D.R. Horton (DHI), Lennar (LEN), KB Home (KHB), Toll Brothers (TOL) are all at extreme highs
After reading the June 28th housing article and watching this video multiple times, I am not sure what the key takeaway is.
All of these are good short candidates (6-18 months time frame)
XHB, ITB, Owens Corning, Pulte (PHM), D.R. Horton (DHI), Lennar (LEN), KB Home (KHB), Toll Brothers (TOL)
People sell houses because of following reasons- Death- Divorce- Job / Income Loss- Kids school / CollegeThese are longer term cycles and always catch up to the shorter time cycles (Covid home buying and equity in house) … The increase in new home construction is going to help increase the market glut and price declines.
Don’t look at existing home sales, look at home prices. Even though the existing housing inventory is low and the home prices are declining.
Have you ever seen something that is low in supply and high in demand and still the price declines??? Look at the forward looking indicators.
I expect a decline in new home sales in Q3 and Q4. And a continuous price drop for US housing. The following can help increase the pace of price drop
Jobs Data / Higher for longer / Inflation Oil and gas prices / Geopolitical issues
Respectfully disagree – The rate of decline in existing home sales has peaked.
I expect with Higher for longer rates, Jobs and Inflation data the rate of home sales (new and existing). and home prices will keep on declining. I expect a divergence between the rate of change of interest rates and rate of change of decline in home sales which will be resolved with a recession.
HYG is approaching resistance are you looking to short it if it hits the target soon.