The US housing market is in an untenable position - rates haven’t been this high in 20+ years.
The implications are twofold:
1) existing homeowners stay put and sit on their historically low mortgage versus sell their home and own a new home with a much higher mortgage.
2) inventory of available homes for sale shrinks and the total cost of ownership closes off many Americans from owning their most significant asset - and where most derive the bulk of their wealth.
So what happens from here?
This should continue to help the home builders who increasingly become the only game in town wrt inventory of available homes for sale.
Separately, add this to the column marked “Where the Fed feels increasingly motivated to initiate rate cuts 1-2 quarters sooner than they would otherwise”.
If the economy stays resilient, this probably isn’t until Q2/Q3 2024, but if we slow faster than expected, we could see our first cut in Q1-2024.
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