Housing prices were coming down this time last year. But, despite mortgage rates at their highest levels since 2000, housing prices are again appreciating and reached an all-time high in August.

Summary Conclusions:

• Housing Affordability lowest since the early 80’s, surpassing 2006.
• Prices at an all-time high and rising.
• Housing sales volume approaching the lowest of the last 25 years.
• Housing available vacant supply the lowest of this century.

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Except for San Francisco, condo prices reach all-time highs as well.

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Having traded in the pits of the NY Merc and CBOT, price discovery is about liquidity, plentiful supply and demand coming together and trading high volume. This is not the case today in the housing market. The US has done a great many things to destroy efficient markets over the years. And pandemic economic policies have impaired this housing market. Affordability is at an all-time low, volume is approaching a quarter-century low, and available inventory is at the low of this century. In this illiquid market, despite record low affordability (record high valuations), prices are still going up. So demand over the summer was greater than supply. What happens if that equation changes? We did see the supply of rental units rise, why sell when you’re locked in at 2.7%?

Affordability–lowest level going back to 2006 which was the lowest level since the early 80’s.bility.

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Volume–Approaching lowest level of the last 25+ years.

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Volume dropped the fastest this century and is still falling.

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Inventory of vacant housing for sale just bounced off the lowest level of this century (blue line). An increase in the number of available rental units (red line).

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