The housing market is in a state of flux, with pending home sales plunging to near-record lows and mortgage rates rising. This trend has been particularly pronounced in the West, where sales have fallen to their lowest level since the data began in mid-2010. What makes this situation particularly fascinating is the contrast between the high supply of existing single-family homes and condos, and the low demand for them. In my opinion, this is a sign that the housing market is struggling to find its footing after years of artificial repression caused by the Fed's quantitative easing policies. The fact that mortgage rates are now in a range that is higher than they have been in decades before 2009, and that the housing market needs to get used to these rates, is a significant development. From my perspective, this suggests that the housing market is in a period of adjustment, and that the hangover from the years of QE is still being felt. One thing that immediately stands out is the impact of rising mortgage rates on the housing market. What many people don't realize is that these rates are not high in a historic context, but rather in the context of the years of QE when the Fed purchased trillions of dollars of Treasury securities and mortgage-backed securities to artificially repress mortgage rates. This immense bout of money printing eventually triggered the worst inflation in 40 years and the worst home-price explosion on record, leading to home prices that are now too high and are a liability for the economy. The fact that pending home sales have fallen in all regions, with the Midwest experiencing the biggest drop, is a sign that the housing market is struggling to find its footing. This raises a deeper question: what will happen to the housing market as mortgage rates continue to rise and demand remains stuck in the deep freeze? A detail that I find especially interesting is the impact of rising mortgage rates on the supply of existing single-family homes and condos. What this really suggests is that the housing market is in a period of adjustment, and that the hangover from the years of QE is still being felt. In conclusion, the housing market is in a state of flux, with pending home sales plunging to near-record lows and mortgage rates rising. This trend has been particularly pronounced in the West, and it raises important questions about the future of the housing market. Personally, I think that the housing market is struggling to find its footing after years of artificial repression caused by the Fed's quantitative easing policies. What makes this situation particularly fascinating is the contrast between the high supply of existing single-family homes and condos, and the low demand for them. In my opinion, this is a sign that the housing market is in a period of adjustment, and that the hangover from the years of QE is still being felt.
