Friday, July 19, 2019

My updated look at housing sales and construction

 - by New Deal democrat

My midyear 2019 update on housing construction and sales is up at Seeking Alpha.

Among other things, I go through nine metrics and show the order in which they typically turn, with very significant lags between the first and last indicators. As a result, housing is telling us very different things about the economy over the next 6 - 9 months vs. the next 12 - 18 months.

Judging by the comments there, people still want to see the prices as leading sales, even though almost always sales turn up or down first before prices do.

As an aside of that, Wolf Richter has a very good piece up about the downturn in foreign purchases of US housing. Well-heeled foreigners, and in particular Chinese buyers, have been very important marginal drivers of the high end real estate market, especially in California, New York, and Florida.

That foreign buying has fallen off a cliff in the last year or so probably explains a lot of the reason why the median price of new homes has fallen so quickly and dramatically along with the 2018 downturn in new home sales, as shown below: