Pace of Home Sales in the U.S. Jumps, Driving Inventory DownOctober 22, 2020
Having hit a 14-year high in August, the seasonally adjusted pace of existing-home sales across the U.S. jumped another 9.4 percent in September to an annual rate of 6.54 million sales, a pace which is 20.9 percent higher than at the same time last year, according to the National Association of Realtors.
And with the rate of sales (demand) continuing to outpace the rate of new listings (supply), listed inventory levels dropped another 1.3 percent to 1.47 million homes, which is down 19.2 percent on a year over year basis (versus 94 percent higher, and a two-decade high, in San Francisco).
Comments from Plugged-In Readers
Will we ever be in a buyer’s market again?
Probably not. Because they can always go for 50 yr, 100 yr and 150 yr mortgages. So whoever got in, got in.
But this may also be a reason to leave cities since high cost of rent is going to put pressure on wages which can spiral out of control. As more people end up in the cannot afford group, either they move out or end up homeless. Services and quality of life will suffer for all. San Francisco is a glaring example of this spiral gone awry.
What are you talking about? We got our $1,200 check 6 months ago. Everything is and will be fine.
Low interest rates are distorting the pricing. Basically, the Fed is paying everyone to gamble. Now certainly some will make it like bandits during the distortion up-slope or incline. In 2008-12, when the ARMs reset there wasn’t enough employment (even with low interest rates) to support the price-levels. Many got caught in the down-slope or decline. In 2020, we now have low interest rates and concerted attempts to keep (prop) up employment/spending power by way of payroll stimulus and free checks.
The situation is untenable with the current yield structure. So the Fed really has 3 remaining tools:
ZIRP Zero Interest Rates + Longer Term Mortgages (45, 50, 100 and beyond terms)
NIRP (Negative Interest Rates)
NIRP + Longer Term Mortgages
A lot of people are paper rich. But once the cash flow turns negative or when the tide goes, we’ll get to see who was swimming naked.
Cave Dweller, if you really think that lenders are going to start offering 100 year or even 50 year mortgages, you are wasting your time posting comments on this site, you should get going on setting yourself up in a lucrative long-term arbitrage position right now.
Your indicator on this should be when Steve Mnuchin wanted the U.S. Treasury to issue 50-year and 100-year U.S. bonds a few years ago, in order to lock in low borrowing costs and save taxpayers money in the long-term, Wall St. banksters that comprise the majority of primary dealers told him there was no interest even though the U.S. has issued bonds like that in the recent past. If banks won’t lend, risk-free, at that duration, what makes you think they’ll do so for homeowners?
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