Building Supply-Demand Imbalance Hostile to Home Price Trajectory

QUICK QUILL —  Friendly home price trends could boost realtors’ moods by way of their paychecks in the short run. However, sales-inventories imbalances in both the existing and new home markets flag a re-exertion of disinflationary forces is in train, one that will compound the Fed’s policy errors.

  1. PPI for Residential Real Estate Agents rose 3.4% YoY in September, the 147th straight month with a positive print; both Redfin’s median sales price rising 5.5% YoY and MBA’s purchase index rising 8.3% YoY suggest the trend is likely to continue in the near-term
  2. The sales-inventories spread has widened to -24.5 points for existing single-family homes and -43.6 points for condos/co-ops, the latter harkening back to the 2000s housing bust; demand struggling to catch up with growing supply flags continued median sales price disinflation
  3. New home prices have fallen YoY in 14 of the last 18 months, and inventories continue to outpace sales in 2024, with the former up 8.1% YoY in September vs. 6.7% for the latter; the spread is even wider for completions, with inventories up 48% YoY vs. sales’ 29.8% print