Housing Market Deterioration
Perspective buyers are now in pessimistic levels, and home builders are slowly grinding down to those levels as well. The second chart shows Home Builders Market Index against the 30y mortgage rate. This is significant. After running Linear Regressions it was found that for every 100bps increase in interest rates you had roughly a 400bps decline in home starts. So not a surprise that higher rates come with declining Home Builder Sentiment.

Young Money Capital's avatar
Would recommend skimming $FICO most recent earnings call. Their mortgage origination data coincides with this data.
Jensen Butler's avatar
Anecdotally, have had several fiends (mid/late twenties) purchase homes in the last year or so and have admitted buyer's remorse. I think everyone is watching housing so closely as the last domino to fall before complete washout, but also feels like there is too much consensus in that being the "obvious" next leg of this market ...
Joey Hirendernath's avatar
Wow, the warp is real, thanks for sharing this.
Rihard Jarc's avatar
I think it is good that we see this. Not just because of high inflation but also because every generation should have the opportunity to buy their home at normal income/price levels.
Deer Point Macro's avatar
@rihardjarc 100% agree. Here is Market exuberance measure: Real house prices have risen quickly and are showing signs of exuberance, and have been showing signs of exuberance over the past year. The price-to-rent ratio is also showing signs of exuberance. Price-to-income (house price to disposable income) is not showing exuberance, which might be the only gleam of hope. But the rate of change in how quickly real house prices have risen is truly shocking. image

Rihard Jarc's avatar
@deerpointmacro Crazy data, let's see if the rate of change is the same going downward.