July 26, 2024 | June Home Sales Drop in Line with ECM

I noted that real estate in the United States would turn into a buyer’s market in May 2024 going into August 2028 in a reversal from the buyer’s market we’ve experienced since 2020. The 2007 high on the Shiller Index was the precise day of the Economic Confidence Model. So far, all the indicators have confirmed that we should have a recessionary trend into 2028 with this turn in the model on this wave.

The National Association of Realtors finally agreed that we are now amid a buyer’s market after June posted the lowest number of sales for 2024 despite a notable rise in inventory. Home sales fell 5.4% in June from May, when the market flipped, to 3.89 million units. This figure is also 5.4% lower than home sales in June 2023.

Gone are the days where buyers would forego inspections and entering bidding wars where the listing price was by no means the final sale price. Inventory from June 2023 to June 2024 has risen 23.4% to 1.32 million available units. Inventory is still a challenge, as are housing prices. The median home cost $426,900 last month, marking a new record-high as well as a 4.1% annual increase.

Homes on the lower end of the spectrum have been keeping averages down. Single-family units between $200K and $350K rose 50% in the past year, according to Realtor.com. There are more homes available now than there have been since May 2020, when sellers reigned supreme. Mortgage rates are far higher than during the 2020 era, and Americans are seeing their available funds dwindling. It is harder for potential buyers to enter the market.

Smart money views mortgages as an alternative to unsecured government debt. Cash remains king with 28% of buyers who have the means opting to forego mortgages entirely, and often can decline high insurance premiums as well. We are also witnessing a mass migration from blue states into red states and should expect prices to decline where there is a dampened demand. It is difficult to view real estate from a national perspective in the United States as demand is up in red states as people continue to leave increasingly oppressive policies regarding taxation, crime, education, and business. If you were thinking of buying a new house right now, lock in the interest rate, for with war on the horizon, long-term rates will rise.

Martin Armstrong July 26th, 2024

Posted In: Armstrong Economics

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