Headlines tout housing surge

The headlines are touting that new and existing home sales BEAT forecasts in May, and that the economy is recovering from cold weather during the first quarter of the year.

The truth is that TOTAL home sales are DOWN year-over-year:

  • existing home sales are down 8.2%  [this category makes up about 90% of total sales]
  • new home sales are flat, up slightly at 0.8%.

Home sales have been improving since 2010, with a peak in 2013.  The peak in sales coincided with interest rates coming off of rock bottom when the 30 year mortgage hit around 3.3%.

Today’s home sales are about on par with 2007 when the economy was moving into recession.  Sales are down about 30% from the boom years of the early 2000s.  New home sales which drove the economy post Dotcom bubble and post 9/11 were about THREE times higher than today.

That subprime induced construction boom is not reproducible today and hence why the economic “recovery” is stuck at an anemic 2% growth rate (zero growth after factoring in inflation).

So why do the headlines tout a nonexistent surge in home sales?  I’ll let you draw your own conclusions.

 

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