Sales Down, Prices Up: Is the Housing Market Showing Signs of 2008?

Even as new home sales plunged in April, house prices hit a record high, leaving some key housing market statistics at levels not seen since the 2008 mortgage crisis.

the the latest reading of new home sales showed a 17% decrease in April compared to the previous month. Year-over-year, the figure fell by 27%.

Still, April saw a continued rise in the price of new homes. The median selling price rose to $450.6,000 during the month from $436.7,000 in March.

Rising costs, combined with rising interest rates, have driven many people out of the current housing market, a factor that could put further pressure on key industry statistics over the coming months.

According to a report by UBS, the affordability of existing homes, or homes that have had at least one previous owner, fell to their lowest level since 2007, just before the mortgage-induced financial crisis of the end of the 2000s. 2000s.

According to UBS, the ratio of median family income to qualifying income for an existing home at the median price (a number that measures how easy it is for a typical family to afford a home) likely stood at 1 .09 in April. This was down from 1.24 the previous month. Meanwhile, the figure was 1.56 for all of 2021.

A separate analysis provided by eToro indicated that the overall housing market has become the least affordable in 40 years. Citing its U.S. housing “poor” index, the company pointed to a 20% rise in house prices over the past year and high levels of mortgage rates for a decade.

With higher prices and signs of waning demand, the number of unsold homes on the market has increased. The latest figures showed unsold inventories for new homes hit their highest level since May 2008.

With the housing inventory rising and the pace of sales falling, there are now enough unsold new homes to match 9 months of sales. This is a dramatic increase from March figures, which showed 6.9 months of unsold stock.

As a result, UBS expects further deterioration in other closely watched housing statistics. The company argued that April’s decline may “somewhat exaggerate the weakening” of the housing market, but still indicated a “clear” downtrend.

“The general downward trend in new home sales should be reflected more clearly in housing starts and permits data in the coming months,” the company concluded.

Given these pressures, homebuilding stocks have steadily declined through 2022. The industry-tracking SPDR Homebuilders ETF (XHB) is down more than 30% since the end of last year. . That included a drop of nearly 3% on Tuesday in the wake of housing statistics, taking the ETF to a fresh 52-week low.

For more on XHB and the general housing market, see why Seeking Alpha contributor Hale Stewart says, “Don’t fight the Fed.”