US housing market remains frozen solid
The bearish case for the US housing sector is that a persistent supply-demand imbalance and high mortgage rates have frozen existing home sales to historic lows.
The argument
The hosts argued that with 30-year mortgage rates stuck above 6%, existing home sales have flatlined for three years. Redfin data shows a historic imbalance of 46.3% more sellers than buyers, forcing homebuilders to offer massive incentives to close sales.
The thesis, stress-tested
✓ What validates it
- ✓US existing home sales dropping below the 4 million annualized run rate
- ✓Lennar's sales incentives rising above 14% of home delivery revenue in subsequent quarters
▸ Risks discussed
- ▸A significant drop in mortgage rates below 6% could unlock pent-up buyer demand
- ▸Continued aggressive builder incentives could artificially sustain sales volumes at the expense of margins
Hear it yourself
"it, but it's that home prices aren't budging. They're not coming down, and they probably will, and they definitely have to. And you combine that with the fact that mortgage rates are going in the wrong direction. It's really ugly, and it's not getting better. So Redfin says there were 630,000 more sellers than buyers in February. Yeah. That's that's right. 40 Gross. 46.3% more sellers than buyers."
15:18 · 15:18
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