This is a world of unprecedented Fed intervention, government stimulus, inflation that has turned red-hot this year amid a weird phenomenon of companies complaining about a labor shortage, while nearly 10 million people are deemed “unemployed” and 16 million people are claiming some sort of unemployment insurance. As 2.1 million mortgages are still in forbearance programs, investors have flooded the housing market, including individual buyers grabbing a second home in crazy bidding wars.
But sales have sagged for the third month in a row, while new listings and supply have started to rise from very low levels, and a lot more is coming on the market this year.
Sales of existing homes – single-family houses, condos, and co-ops – dropped by 2.7% in April from March, after the 3.7% drop in March, and the 6.3% drop in February, to a seasonally adjusted annual rate of 5.85 million homes, the lowest since July 2020, according to the National Association of Realtors today. Compared to April 2019, sales were up 11.8%, having now largely unwound the huge spike that started last summer (historic data via YCharts):
Investors are buying.
All-cash sales, usually a sign of investor activity, accounted for 25% of all transactions in April, up from 15% in April 2020. Individual investors and second-home buyers accounted for 17% of total home sales, up from 10% in April 2020.
Dallas Fed President Robert Kaplan pointed at the role of these investors in distorting the housing market, and named that as one of the reasons for “talking sooner rather than later” about tapering QE…..