May existing-home sales continued a 13-month slide in year-over-year results. This is despite a nearly 50-basis point decline in the benchmark 30-year mortgage rate to rates that are once again below 4 percent, a modest increase in inventory levels and moderation of rising prices for both new and existing homes. Lastly, this is in the face of the lowest unemployment rates of several generations among virtually every demographic group in the nation.
So, what gives? For the past 40 years, when any of these factors pointed the same direction as they are now, housing sales would take off. Now, with every factor in favor of housing, we see month-
over-month declines in existing home sales and flatness in the new home sales segment. Here are some thoughts.
The bottom line is that unless (and until) government reduces the cost and complexity of new-home construction, which would ease the many bottlenecks blocking such construction, there’s little way the housing market will change from its current condition. That is unless you think a significant recession in the general economy will help.
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