While markets have calmed down somewhat from December’s chaos, there are still worries over the domestic and global economy. Part of those worries is the real estate market, which continues to sink into a notable slump that could either prove a blip or an important leading indicator. December homes sales fell 6.4% from the previous month and a whopping 10%+ from last December. The market is suffering from significantly elevated mortgage rates and a lack of starter homes. The big fall in sales is counterintuitive because of the currently strong labor market.
FINSUM: The housing market reflects interest rate rises in a very pure way. The big question is whether this is a leading indicator or a slowdown that is idiosyncratic to the sector. To be honest, we think it is some of both.