Macro update on the US housing market The US housing market has started its decline for the month of July and August. The median home price declined 0.77% which is a month over month comparison to June. Annual home price appreciation is still up by 14%. According to realtor.com, the national median price for active listings in August declined to $435k from $450k in June. This represents a decline of 3.3% over the last couple of months.
I have strong conviction that home prices will decline over the coming years which is a result of the M2 money supply that has far outpaced the nominal gdp. It is interesting to note that the M2 money supply increased over 40% since February 2020 and the US shiller National home price index is up 44.5% in the same time period. The Fed has no more plans to grow the money supply and with quantitative tightening on its way, it will shrink the supply of money in circulation. This is deflationary by nature and I believe this money tightening is going to hit the housing market and help to bring down inflation. I don't believe things are as severe as the Great Recession but I think a reasonable 10% correction in home prices over the next several years is a good possibility.
From realtor.com, the number of homes actively for sale in a typical day in August increased by 26.6%. It is interesting to note that active listings in August is still lower than 2020 by 7.2% and 43.8% from pre-pandemic levels 2017-2019.
In August, newly listed homes declined by 13.4% compared to last year. The inventory of homes in the 50 largest US metros increased by 39% y/y
https://nypost.com/2022/09/07/homeowner-wealth-suffers-as-home-prices-fall-mortgage-rates-surge/amp/
https://www.realtor.com/research/topics/housing-supply/