Is This the New Normal for Housing?
Everyone is waiting for housing to reset. They may be waiting forever.
Ten months ago I wrote a post called Is Housing in a Recession?
I agreed with the diagnosis. I said we were in one. And I said that to pull out of it, we’d need the 30-year mortgage rate to start with a 5. Even then, I wasn’t sure that would be enough.
So here we are. Let’s check in.
The 30-year mortgage rate is sitting right around 6.5% today. A year ago it was 6.77%. Rates have drifted lower, but they never came close to that 5-handle I said we’d need. The market got a brief look at 6.09% back in February. Then it reversed. That was as good as it got.
Rates touched their low for the year, buyers got excited, and then rates climbed right back up. The refinancing index tells the same story. Every time rates dip, there’s a brief pulse of activity. Then the window closes.
Existing home sales in May came in near the highest level in nearly four years. Closed sales jumped. Inventory hit a 6-year high. Prices are at a record. On the surface, things look better.
But look at this chart, which goes all the way back to 2010.
That red line is where we are today. 3.64 million. We were at this exact level for years before the pandemic, on the way up. The market has spent three years clawing back to a level it passed through casually on the way to something much better. There has been no progress in existing single-family home sales since the fall of 2023.
Here’s the question I keep coming back to. Everyone wants to know when housing goes back to normal. Lower prices. More inventory. Rates that make the monthly payment manageable.
What if this is normal?