This month’s figures prove that the so-called “housing bubble” is not only real, but that its cratering faster than anyone had realized. As the UK Guardian reported a couple of days ago, “the orderly housing slowdown predicted by the Federal Reserve will (soon) become a full-blown crash.”
To hear the real estate agents tell it, the housing market has “lost steam.”
What they really mean, of course, is that it’s hit a wall – though you won’t get them to admit that publicly. And from all indications it’s not going to improve any time soon.
Five and a half years ago the equity bubble popped. Within six months, the US economy went into mild recession, and the global economy was quick to follow. Today, America’s housing bubble is finally bursting. Is the die cast for another bubble-induced downturn in the US and global economy?
Home sales should be leveling out in the months ahead at a lower pace, according to an index based on pending home sales, a leading indicator for the housing market published by the National Association of Realtors®.
The Pending Home Sales Index,* based on contracts signed in July, is down 7.0 percent to a level of 105.6 from a downwardly revised reading of 113.5 in June, and is 16.0 percent lower than July 2005.
…. Lereah said psychological factors account for much of the decline in July home sales. “We’ve never seen a general decline in the housing market against a healthy economic backdrop where jobs are being created, the economy in growing and interest rates are favorable,” he said.
File this under car wreck, as in, you don’t really want to see it, but you cannot look away. I’m talking about the latest batch of housing numbers. They all show pretty much the same thing: sales slacking off, inventories rising.
If and when certain markets collapse 20% to 30%, it should not be deemed a bubble. It will happen in some markets and has happened in over-built condo markets. But these units will be absorbed in the next few years. The greatest pain will be felt by the biggest speculators and the most overzealous people participating in unorthodox loan programs.