October marked yet another month in the fully bifurcated housing market, in which most existing homeowners are frozen in place by their 3% mortgages, and buyers have turned to new homes (and in particular condos and apartments) instead.

Existing home sales fell yet again, by 16,000 annualized, to 3.79 million, 45% down from their 2021 peak, and the lowest level since 1995:

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This is of a piece with the collapse in purchase mortgage applications, which have also declined to 1995 levels, per Edward Yardeni:

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With inventory so restricted, prices have held firm, and have even increased. In October, the median price (which is not seasonally adjusted) rose for the fourth month in a row on a YoY basis, by 3.4%, to $391,800 [note: current month’s data not included in the below graph]:

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For comparison, here are new home sales since 1995:

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So long as the Fed keeps interest rates elevated, we can expect this trend of a frozen existing home market driving people to purchase new single family homes and condos to continue.

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