It is no secret that the housing market has gone ballistic over the past two years. Yet, there is now growing evidence that extremes in the housing market are coming unwound.
Yesterday, the Census Bureau reported that Building Permits have continued to plunge as homebuilders recognize that conditions have become unfavorable with mortgage rates surging to a 14-year high. Builders already have a record number of units that are currently under construction, and with their current projects proving more difficult to sell at a profit, they are significantly scaling back on their future building plans. It’s also worth noting that while Housing Starts rebounded last month, Building Permits are far less volatile and a better gauge of future activity – making last month’s drop particularly concerning.
The housing news got even worse this morning, as the National Association of Realtors (NAR) reported that housing prices declined for the third straight month on a seasonally-adjusted basis. And with the average 30-year mortgage rate surpassing 6% for the first time since 2008, the outlook for prices moving forward isn’t getting better. Consequently, we must question how far and fast housing prices are going to come down now that the pinhole appears to be in place…
