How Delta variant may impact housing market

HW+ mortgage rates desk

The following Q&A comes from the HW+ exclusive Slack channel, where HousingWire’s Lead Analyst Logan Mohtashami answered questions on what to make of the latest housing data, his forecast for the rest of this year, and whether or not the housing market is returning to normal. He also addresses how he foresees the Delta variant impacting the housing market. Looking at the data, it’s not as simple as comparing year-over-year changes or even monthly changes since the past year was filled with never-before-seen situations.

The following Q&A has been lightly edited for length and clarity.

HousingWire: There’s so much happening in the housing market right now, it’s hard to stay on top of the latest data and what it means. What are the top takeaways that people should know about the market right now?

Logan Mohtashami:

  1. We have a lot of crazy housing data, but when you make COVID-19 adjustments and work on the moderation from the parabolic run-up from the 2nd half of 2020, not much is happening in sales data. This looks very normal to me, especially with the existing home sales data that ended 2020 with 5,640,000, which is only 130,000 more than 2017 levels. 
7-Existing-home-sales

2. We see that in the new home sales market as well, which the data got extremely wild.

7-New-home-sales-ink-

3. The uptrend is new home sales working from the weakest housing recovery from 2008-2019 is still intact even with the extremely high cost through price inflation buyers had to deal with in 2020/2021.

7-new-home-sales-long-ink-

4. Of course, the main reason why I say this is the unhealthiest housing market post-2010 is that pricing has gone straight vertical in the existing home sales market, not because of a credit boom but because of a raw shortage of homes. This was my big fear. 

5. The 5-year cumulative price growth model that I had for years 2020-2024, which I believed things would be okay if we just only had 23% price growth during this period, has been smashed before two years.

8-Real-home-prices-year-over-year

That gives a headline look at what we are dealing with currently.

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