The Case-Shiller index, which lags by several months, is starting to flip market by market, including in Phoenix, Dallas, Washington DC, and Boston.
But these sales happened during the “Fed pivot” fantasy that pushed mortgage rates down to 5%. Now mortgage rates are near 6.5%.
To prop up sales, 24% of home builders cut prices, others tried mortgage-rate buydowns or other incentives.
And this was during the summer rally as mortgage rates dropped to 5%, stocks bounced, the Fed “pivoted,” and the Good Times started all over again.
The purpose of MBS purchases was to repress mortgage rates and inflate home prices. That process has already started to reverse.
#Phoenix builder: “The positive is there’s light at the end of the tunnel for improving build cycle times. The negative is there won’t be customers on the other side of said tunnel.”
Mortgage volume collapsed. And the stocks of the biggest mortgage lenders collapsed after IPO or SPAC merger.
The Case-Shiller index, which lags 4-6 months, is starting to pick up the price drops in Seattle, San Francisco, San Diego, Los Angeles, Denver, and Portland.
Forget “housing shortage.” It’s about crazy prices: For sales to revive at these mortgage rates, prices have to come down a lot, and they’re starting to.
San Francisco & Silicon Valley lead. Southern California catching up. In Los Angeles, prices fell in July from June for the first since Adam and Eve.