Housing Prices Are High and Potentially Illusory

I once received a strange compliment from a reader who said a column I had written made him say “Oh s***!” This was good because I’d shown him that there were serious problems on the horizon (in the commodities market, shortly before it crashed in 2008). Unfortunately, a recent look through the statistics on US housing just made me say exactly the same thing — and I don’t think it’s positive.

Many aspects of the economy are still being buffeted by the ripples from the pandemic, which makes precedents hard to apply, and should make everyone cautious as to their judgments. Housing market data is also, inevitably, reported with a lag. That said, the latest numbers on monthly sales of existing homes in the US show they are selling at an annualized pace barely above 3 million. Barring one bad month in the aftermath of the Global Financial Crisis, this is the worst figure in 27 years: