The Keystone Speculator's Housing Market Indicator Chart Signals US Housing Recession in 9th Month Starting the 10th Month

Happy Autumn. Keystone is never invited to the Fall harvesting picnics and Halloween parties because he always brings the wet blanket. The US housing market is in a recession for 9 months, it started at Christmastime, and days away from starting the 10th month.

Conditions worsen for every month thus far as verified by the red and green moving average lines diverging now 82 units apart. The rate of change month-on-month has slowed for the last set of data last Tuesday but the bottom line is that the housing recession worsens.

However, it is different this time. The huge amount of Fed and Congressional liquidity jammed into the market during the COVID-19 pandemic creates the inflation problem and sends house prices to the moon. The low mortgage rates for 14 years, because the Fed made it that way enriching their wealthy friends and powerful masters, has created low inventories in existing homes for sale. People want to stay put since their mortgage rate is small compared to today's rates now pushing 5%, 6% and 7%.

In addition, wealthy cash buyers are propping up the housing market over the last year enriched by the Fed printing money and the Congress spending money like drunken sailors. These wealthy buyers are purchasing homes and having homes built for cash. The home builders enjoyed a big rally in their stocks because of the wealthy buyers walking into the office, slapping $500K in cash on the table, and telling the builders they want a McMansion with granite counter tops.

The dirty truth, and there is always dirty corrupted truth behind everything you hear in today's corrupt world, is that these wealthy buyers are a Motley Crew (Crue). Let's take the Harley's out for a ride, boys. 

Anyhoo, back to the dirty truth. The majority of wealthy buyers supporting the housing market are the CCP (communist China leaders), Arabs (decreasing oil supplies to send prices higher and make more money), although I guess Arabs is no longer an accepted word but Keystone does not pay attention to such dribble, and US gangs and Mexican cartels (making money off drug/fentanyl trafficking). Don't you want these corrupt and criminal folks as your neighbors? We need Oliver's Army.

One in five homes are purchased by corporations (that also account for the cash buyers) a disturbing trend. People are moving to states such as Texas and Florida also creating enthusiasm in the new home market but this activity should fade over time. The wealthy house-buying does not last forever and it is beginning to show in the data. Builders are now offering incentives. Commercial real estate remains a growing problem; watch the activity at strip malls.

In July, Keystone told you the homebuilder stocks were topping-out due to negative divergence, and they did. TOL recovered for a double-top but that was an even easier top call due to the glaring neggie d. KBH, DHI, LEN, TOL and the XHB ETF all peaked in July as forecasted.

The US housing recession is now finishing its 9th month, starting the 10th month, with the indicator lines diverging from each other (worsening). Here is a link to the prior housing market article.

Four days ago, US Housing Starts are down to 1.283 million not seen since July 2020 over 2 years ago! The business media did not say a word. Analysts are picking their noses. Folks, Housing Starts are at 2-year lows! In addition, the Housing Starts data has been revised lower for every month this year except February which was revised higher by only a hair. Housing Starts revisions are down for the last 6 consecutive months so even the low 1.283 million will likely be revised lower in October. 

Loan rejections are at a 5-year high. Put that in your pipe and smoke it. Sounds like the corporations will buy even more homes (the military-industrial-corporation complex). Most Americans are rubbing two nickels together to try and make ends meet.

It is different this time because the ongoing housing and manufacturing recessions should have already sank the US economy into recession. There is a new game in town and that is semiconductors. Actually, chips have led the stock market for a couple decades and the importance of chips, and now AI, dominates the path forward for stocks and the economy (i.e. when the recession will hit).

Semiconductors have broken down over the last 2 weeks sending the US stock market south. Banks, retail stocks and other important sectors follow the chips down the rabbit hole. Now that the new kid on the block, the chips, a chip off the ole block, has given up the ghost, the sickness in housing and manufacturing should kick-in more negativity heralding the arrival of the US economic recession that has been spending time this year hanging out with Godot. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 9/26/23, Tuesday, at 11:00 AM EST: The S&P CoreLogic Case-Shiller Home Price Index, try to fit that on a business card, reports a slight increase in home prices despite lower sales. It is a reflection of the tight supply.

Note Added 9/27/23, Wednesday, at 1:00 PM EST: New US home sales fall -9% on-month but are +6% higher year-on-year. Construction of new homes bumps higher as the rich foreign cash buyers continue to slap $500K on the table telling the homebuilder to provide a McMansion with a sauna in the bathroom. The median price of a new home declines from $436,600 to $430,300. Home prices are dropping for five consecutive months. Maybe these people should talk to the Case-Shiller people that say home prices just hit a new record high. Zoopla House Price Index reports a drop of -0.5% in home prices year-on-year the first decrease since 2012. Mortgage Applications fall -1.3% on-week. Mortgage rates are running above 7% the highest in over two decades, so folks, that would like to move to a different house, are staying put unwilling to give up 2% and 3% mortgages. The demand for mortgage and refinancing applications fall on-week.

Note Added 9/28/23, Thursday, at 10:02 AM EST: US pending home sales collapse -7% on-month and fall -19% from prior year. Market commentators, pundits and analysts continue telling the American public that everything is Feelin' Groovy. 

Note Added 9/29/23, Friday: New York City is luring rich foreign cash buyers to purchase condos and boost the housing data. The housing recession is ongoing all year long but the wealthy cash buyers, as explained above, keep the new home builders busy. It is different this time (recession delayed) because of the obscene central bank and government money floating around that made the wealthy class filthy rich. These cash buyers (wealthy elite, China's CCP, Saudi Arabian oil giants, drug cartels, fentanyl traffickers, gangs, etc...) continue slapping stacks of cash on the table asking home builders to provide a McMansion with a 5-car garage (perhaps something with a large basement that can house a meth lab). America's crony capitalism system always sells its soul to the highest bidder.