December’s existing home sales numbers are out for December 2020. The numbers are 6.76 million SAAR existing home sales, growing at 0.7% MoM. But on a YoY basis, existing home sales grew at 22.24%.
The troubling chart, and the chart that HUD, Fannie Mae and Freddie Mac should play close attention to, is existing home sales inventory and existing home sales median price. Inventory has plunged to an all-time low while median price fell slightly from its all-time high.
It will be tough for HUD and the GSEs to increase affordable housing (as promised by Biden) with roaring home price growth, a severely limited supply of housing available and low M2 Money Velocity.
How can the Biden administration increase “affordable” housing? Loosening credit standards is the obvious (and economically dangerous) way. Eradicate local zoning (to help relieve the supply constraint)? The Federal Reserve is already printing money at a breakneck pace, but that is helping drive home prices up and not helping low income households.
I suggest that the Biden Administration think carefully about trying to solve this supply problem rather than simply calling for a cavalry charge from The Federal Reserve and Treasury.
Addendum: Median price of EHS is growing at housing bubble highs.
Let’s see if the foreclosure moratorium impacts the available supply after Covid disappears.