Historically the best forecasters have been able to consistently recognize that we are in a recession. Once we are actually in one to preemptively determine its onset has riddled economists for decades. Yet, an AR is Lawrence soon called a recession in August when he said, "In terms of economic impact, we are surely in a housing recession."
A recession is defined by Oxford is a period of temporary economic decline during which trade and industrial activity are reduced. This is generally defined by a fall in GDP for two consecutive quarters. This definition has then been further clarified by the National Bureau of Economic Research to a significant decline in economic activity.
Active listings while almost double last year, they've started their seasonal downward slope towards December by dropping 5.7% month over month, new listings peak a few months early this year dropping another 18.5%.
This month, median and average home prices have also seen a steady slowdown from well over 20% earlier this year to 6.8% average and 8.5% median year-over-year increase in August.
Days in the MLS grew from six median days to 11 and close to list dropped to 99.41%.
Year-to-date new listings and home sales are behind 2018 and 2019 by approximately 8%, showing that both sellers and buyers are moving slower, not just than the pandemic frenzy but also the pre-pandemic seasonality.
The slowing has come primarily from the rapid rise of mortgage interest rates increasing the monthly cost to purchase August saw more than its share of volatility.
Think of a child you've been giving Tootsie Rolls to for over an hour to keep him quiet during your very important meeting. How justified is the pain that child ensues as he works his way off the sugar rush? Justified or not, inflation must be tamed, and it will cause pain, but that pain is relative. It's relative to the specific household and the specific industry.
ADP's August employment report also showed pay increases nationwide for those who stayed on their job by 7.6%, and up for 16.1%; for those who got new jobs, consumer sentiment even increased this month by 13% due to a 59% surge in the year ahead. Outlook for the economy? Consumers are feeling good about inflation, getting tamed jobs secured and a quick economic recovery. All of this comes back to defining a housing recession.
Lawrence said it best, "It is a difficult market for those selling homes and for home builders. But homeowners continue to accumulate housing wealth from rising home prices."
I will concede through the definition of a housing recession by slowing the sales cycle, but with builders, not building, homeowners locked into rates not likely to be seen again, and baby boomers aging in place, inventory will not right size for a very long time. If ever this lack of inventory will keep home prices increasing over 27 trillion in homeowner, equity will keep homeowners from having to sell at a loss wage increases will keep buyers able to purchase.
This is Nicole Ruth with The Rueth Team, now the proud and excited newest member of the OneTrust Home Loans, family. It's my pleasure to keep you updated.
Listen to the full 9-minute episode to get more detailed comparisons and statistics.
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