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hey there so I was reading an article and I I thought I thought the headline was great so I figured we should uh go over it let's get into it here it's on Zero Hedge but it's from Bloomberg and um it says Penning home sales puked in August to the lowest record now that doesn't sound good so I figured let's let's dive into it and see what it's about it says with existing home sales that they're low since 2010 and new home sales finally hitting the wall pending home sales were expected to decline month over month in August after an uptick in July amid Sor soaring mortgage rates and plunging affordability and they did bigly so let's let's just start off with the first line there so existing home sales have been going downhill uh new home sales uh you know last month uh were not looking great even though for a long time the new home sales were were doing pretty well because you were able to get um rate concessions from the builders um and so that was that was where that was going um and so yeah pending home sales are expected to decline that was not a surprise but I think it's hilarious it's pending home sales plunged 7.1% month over month in August dramatically worse than the negative 1 % expected dragging sales down 18.8% year-over-year now look I mean I'm a big fan of what goes up must come down right so we could not have had a housing market continue on the tour Pace that it was on for the last couple years I don't care even if you even if you never touched interest rates it was unsustainable okay so now we're going to see um we're going to see reversion of the mean uh the that's the biggest month-over-month decline since September of 202 2 and drops the overall index to exactly equal its Co lockdown lows the worst on record so for me I kind of just throw out the co lockdown lows because that was kind of manufactured yes for like a month we couldn't do real estate transactions but once everything opened up enough that we could show houses and list houses it it it everything came right back and you can see that in the sharp um move up on the graph says uh the Penning home sales report is a leading indicator of existing home sales given houses typically go under contract a month or two before they're sold so that's right so typically when I'm writing a contract uh to purchase here in St Louis I like to put in 30 days if it's FHA I might go 45 days but for the most part 30 days on a close would be totally reasonable now the thing I worry about with the pending home sales is um are these houses that have gone under contract the first weekend and then have gone out of contract due to a mortgage great shock uh as an example some what in real life what happens is uh buyers are working with uh mortgage professionals and they may have gotten a a pre-approval for 6.5% on a 30-year fix mortgage they may have been approved for that the rates could have gone up with no one really paying attention to seven and a half where we might be right now uh or even higher so that when they actually go under contract uh on a property uh they aren't aware that the rates had changed so much and when they uh go to lock in their rate they find out very quickly that they they're not able to get the mortgage and so they normally back out due to the finance Clause this could also be a seasonal type of thing where uh we just kind of passed our our big months for sales in traditionally in real estate for the year um typically around September things start to fall off it's just the last gasp of August that uh that's out there so up until now maybe March we won't have tremendous sales just year-over-year it's just not the way it normally is the last two years being anomalies uh so and then so there's a quote here it says some would be home buyers are taking a pause in re adjusting their expectations said Lawrence Yun the National Association realtor Chief Economist and it's clear that increased housing inventory and better interest rates are essential to revive the housing market now look this is this is fascinating because all real estate is local and what I mean by that is um you know what we're seeing in St Louis isn't necessarily the same thing as people are seeing in other parts of the country um the west and the Southwest are not doing great you know they're they're seeing a lot of uh price adjustments and things like that I'm still seeing houses uh move off the market pretty quick as long as it's a nice home so for example on Friday night I showed a house in University City uh it was under contract by Saturday morning I thought it was a very a very well represented home I thought it was Priced Right and I I can understand why that one went but I had looked at uh four other houses that were in the $600,000 range um with some other buyers and those houses have sat on the market for a couple months now uh there to me they weren't they sat on the market because the value just wasn't there but those are all houses that would have easily gone under contract in a rate environment of 3% easily so um what I would say is we should expect numbers to continue to decline uh our pending home sales uh total units sold all these things should be going down we're we're not going to see the market we saw for sellers uh the last two years I mean just it's just not likely so uh maybe you have a different opinion though maybe you should put it in the comment section and tell me why I'm wrong I'd be interested to know with that I think I'm headed out thank you for watching thank you for listening and I'll catch you on the next one