· Since peaking in 2020, both new home sales and existing home sales have collapsed, as tighter supply and higher costs have limited buyers
o New home sales peaked at an annualized rate of 1,019,000 units, but now sit at 590,000 units[i]
o Existing home sales peaked at an annualized rate of 6,560,000 units, but now sit at 3,820,000 units[ii]
· On the other hand, housing starts peaked in 2022 at an annualized rate of 1,803,000 units, and while they have declined, it has been at a less significant pace – most recently came in at 1,560,000 annualized units[iii]
· The housing market traditionally contributes 15-18% to GDP through residential investment and consumption spending on housing services,[iv] and this slowdown has had some significant knock-on effects
· The Mortgage Bankers Association’s Mortgage Credit Availability Index fell some -25% in 2022 and now sits at its lowest level since 2012[v]
· As mortgage lending has dried up, this has contributed to increased layoffs by financial firms – Wells Fargo, Citigroup, Bank of America, and JPMorgan Chase cut some 22,000 jobs last year[vi]
· Fewer people moving homes has also contributed to less spending at several types of related businesses – on a year-over-year basis, retail sales at:
o Furniture and home furnishings stores were down -5.5%[vii]
o Building material, garden equipment, and supplies dealers were down -2.8%[viii]
§ Both Home Depot[ix] and Lowe’s[x] lowered their 2023 full-year guidance after announcing their Q3 numbers
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[i] www.tradingeconomics.com, “United States New Home Sales,” January 10, 2024
[ii] www.tradingeconomics.com, “United States Existing Home Sales,” January 10, 2024
[iii] www.tradingeconomics.com, “United States Housing Starts,” January 10, 2024
[iv] www.nahb.org, “Housing’s Contribution to Gross Domestic Product,” January 10, 2024
[v] www.mba.org, “Mortgage Credit Availability Decreased in December,” January 9, 2024
[vi] www.ft.com, “Banks shed 60,000 jobs in one of worst years for cuts since financial crisis,” December 25, 2023
[vii] www.census.gov, “Advance Monthly Sales for Retail and Food Services, November 2023,” December 14, 2023
[viii] www.census.gov, “Advance Monthly Sales for Retail and Food Services, November 2023,” December 14, 2023
[ix] www.cnbc.com, “Home Depot shares rally on earnings beat, even as home improvement sales level off,” November 14, 2023
[x] www.cnbc.com, “Lowe’s cuts sales outlook as homeowners take on fewer projects; shares slide,” November 21, 2023