New Home Sales Collapse In December As Trump Rate Surge Hits

Tyler Durden's picture

With soaring mortgage rates and plunging mortgage applications, it should be no surprise that new home sales crashed in December. Analysts expected a modest 0.7% decline but sales crashed 10.4% - the most since March 2015 - and at 536k SAAR, this is the lowest since Feb 2016.

First annual decline since February...

Home sales in The Midwest crashed 41% sequentially and 29% YoY.

The supply of homes for sale increased to 5.8 months, the highest since September 2015, from 5 months in November. There were 259,000 new houses on the market at the end of December, the most since 2009.

This is the first clear indication that higher rates are crushing the housing market...

 

And Median home price surges to $322,500, second highest in series history, just lower than the record $323,700 in September

 

As Bloomberg points out, the figures indicate that the increase in mortgage rates curbed momentum in the housing market after steady job gains and historically low borrowing costs helped push full-year sales to the highest since 2007. Stricter lending standards also remain a hurdle for buyers this year.

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NugginFuts's picture

Ah yes, Jobless claims up, Home Sales down.... but the PMI says we're all still hoping things are getting better so why not shoot stocks through the roof some more?

Man I hate this "market". 

markpower49's picture

The free money spigot is ending and house prices will crash again, even worse than before, because there is twice as much debt, both gov't and personal.

Max Damage's picture

They can now park all those spare cars on the empty driveways. Bullish as fuck. New ATHs?

NihilistZerO___'s picture

Fuckin' A.  Pop goes Housing Bubble 2.0!

You CAN'T have a real recovery with Housing Costs inflated this high.  There is NO wage inflation coming that can support these prices.  Especially with Boomers starting to cash out.  The coming Trump jobs boom can only put a FLOOR under the crash.  Let the creative destruction begin!

auricle's picture

If it's not 'since Lehman' then it's not ZH print worthy.

Atomizer's picture

My favorite in Florida. Rent their dock, but don't own the boat. 

Shropshire Lad's picture

Never make projections from just one month's figures -- first rule of time-series analysis.  By the end of March, it will be clearer which way the economy is going.

chubbar's picture

Love how this is characterized as Trumps rate increase when he wasn't even sworn in as president yet. Just a sign of what is coming, this train wreck is going to be pinned on him and the stupid fucks throughout this country on both sides will buy it.

itstippy's picture

The President doesn't set interest rate policy, the Federal Reserve does, and The Fed is completely apolitical.  Their rate decisions are purely data-driven.  Do you even listen to what Janet Yellen has to say, or do you just stare at her boobs?

chubbar's picture

Well, you just made my point for me didn't you? Thanks.

Dolus's picture

You buy the a monthly payment not a house.

NumNutt's picture

Well it is eaither that or you pay another persons monthly payment, and put your money in their pocket. Take your pick...

Atomizer's picture

Buy in cash, call it a day. 

PirateOfBaltimore's picture

Rent at exorbitant rates and try to save for a house in a metro area?  I'd be dead before a cash purchase happens.  

 

Or the cash purchase would happen, but I'd be dead because it's in the 'hood.

markpower49's picture

If your rent is too damn high, MOVE. Freedom to relocate is the point of renting. Expensive areas are filled with shitlib scumbags anyway. Property taxes will sky-rocket to pay public pensions.

FlSapo's picture

why , use the banks money at low interest rate and aquire more PM and other tangibles.then rent it out to the useless eaters.

Houses Depreciate's picture

Rent it for half the monthly cost. Buy later after prices crater for 65% less.

hotrod's picture

If things are SO GREAT then how in the world does Yellen's nothing rate increase cause such a decline?  Maybe prices are haywire.  2 of my 3 kids are getting close to house buying age and I will tell them to stay out of the housing market.  Just insane around Atlanta metro.

shizzledizzle's picture

You got that right, moved out of Roswell a few years ago and it was absurd then. I can only imagine now.

hotrod's picture

Roswell is outside the Perimeter and still NUTS regarding price.

austinmilbarge's picture

Atlanta denizen here as well. It's crazy all the way out to Acworth and Woodstock too. Renting for the time being. Can't imagine buying into this market.

ebworthen's picture

$322,500 mortgage in a $10/hour economy, the math is not good.

And once again the debt is via FHA and Fannie/Freddie (Taxpayers) with the gravy going to the banksters.

Lather, rinse, repeat.

Citizen_x's picture

 

Hey Now...naysayer

10 years ago any teenager with a paper route could get a $500K mortgage.  That worked out just fine for pension plans, or

did it ?   sarc ;)

Kayman's picture

Low interest rates, with the Fed's thumb on the scale is the only reason house prices are so high. At 7% mortgage rates, watch house prices fall in half.

There is nothing inherently expensive in building a house. But the Fed has fucked it up by financializing everything for it's grubby banking friends.

vq1's picture

1986:
median income - 51k
median home price - 92k

2015:
median income - 56k
median home price - 284k

https://fred.stlouisfed.org/series/MSPNHSUS
https://fred.stlouisfed.org/series/MEHOINUSA672N

I'm a renter. No debt, no kids. I'm not optimistic that prices will deflate. Ill be a wage slave forever. Only reason i don't buy an acre or 2 of land to live subsistence life is because i require health insurance. Be employed or rich or you die.

order66's picture

Happens every December. Nothing to see here.

NihilistZerO___'s picture

The FED raises rates before every December while promising to raise 3 times the next year?  I don't think you were FED watching to closely the last 8 years.

GunnerySgtHartman's picture

Great article sir, thank you for the link!

wisehiney's picture

Won't be needing mexican labor.

Plus it's yellens fault for raising rates.

Winning!

shizzledizzle's picture

Someone should tell the market. 

small axe's picture

home prices never go down ... read it in a book, by Charles Ponzi (foreword by Kyle Bass)

vq1's picture

Now they won't. Watch- home ownership will continue downward, yet banks will continue to use real estate as a financial product and there is no limit to how many additional homes the elite need

I am Jobe's picture

Austin, Texas are insane. Time to increase property taxes .

Kayman's picture

Inflating housing prices are great for the parasite class- bankers and government employees.  More skimming and taxing, while the home owner steps onto the carousal of illusion.

Seasmoke's picture

Seems like a great reason to push Oil and Stocks up. And Gold and Silver down.

SERReal1's picture

Rates go up, prices at record highs. This will end well!

finehowdoyoudo's picture

And housing stocks are in an uptrend.

CHoward's picture

The days of true home ownership as a part of the great American dream are over.  Anyone who drops out because of .25pct increase should not be considering buying a home anyways.  Nothing wrong with a nice apartment. 

vq1's picture

Nothing wrong with a nice apartment except that rent will increase faster than your wage. Homelessness is only a matter of time. No matter how much you save or how many raises you get. 

MisterMousePotato's picture

Not to mention the difficulty of managing a garden. Or your neighbors.

vq1's picture

Or your landlord illegally entering without notice to find your stinky green plants. 

Mr. Bones's picture

I would be an ideal buyer based on all of the classical characteristics, but I don't have an existing home to borrow against and inventory is limited or non-existent in the Goldilocks - reasonable square footage, built in the last thirty years, middle class neighborhood set.  It's all mcmansions, retirement cottages, and borderland neighborhoods that are either butted up against the freeway or the mid-low income rental hives.  I'd have to stretch myself out on a loan to make a purchase worth it, which is, incidentally, exactly where I was 11 odd years ago.  I could have easily afforded my current domicile when it went up for sale last, but I couldn't have lived in it for the reno, I probably couldn't have afforded to rent, pay a mortgage, and fund a renovation while working and keeping my thumb on a contractor.

It wasn't normal to be in debt up to your eyeballs until recently, god help the poor bastards that bear the brunt of whatever is coming.

vq1's picture

My reoccurring nightmare is that some day there will be a debt jubilee and everyone will keep all thier fun toys and I'll be the dumbass

Houses Depreciate's picture

Better than paying 3x the rental rate for a rapidly depreciating house.

RedBaron616's picture

It also shows the Obama economic "recovery" was a mile wide and an inch deep!

Praetorian Guard's picture

What people should be calculating, is how much food they have stored for when JiT crashes. ...but maybe they can eat their Chinese dry wall...

 

https://www.gunsgrubandgold.com/content/section/119-food-calculator/

chosen's picture

Rates are not even near normal.  They need to at least double to get back to historical norms.  This response to a tiny increase in rates suggests the housing price bubble is close to popping.