The reality of the home sales market is in the eye of the beholder these days and the just-released Existing Home Sales report doesn’t shed much light. The National Association of Realtors (NAR) logged an annual pace of 4.3 million units, essentially unchanged from last month’s 4.28m and close enough to the median forecast of 4.25m. Existing sales bottomed in January at 4.0m units, and you’d have to go back to 2010 to find anything lower. The bounce back since then has lacked a certain sense of urgency, but that’s not a huge surprise given the persistence of mortgage rates near 7%. A frequent observation is that the rapid rise in rates has homeowners reluctant to give up the low rates achieved in 2020 through early 2022, thus crimping supply and restricting sales. The housing market has certainly managed to post a lot more inventory at rates this high, but only have years of getting used to them (not to mention the fact that rates were still generally falling from the ultra-high levels of the early 80s at the time). A chart of actual sales (as opposed to inventory) versus mortgage rates suggests that the ultra-low rates achieved in 2020 through early 2022 also helped pull forward a few years worth of housing demand. All that having been said, those who continue to lament inventory being a bigger issue in the resale market certainly have a leg to stand on. The difference in “months of supply” versus the new homes market is very enlightening in that regard.
