Updated: Aug 30, 2022
This Number Scared the Heck Out of Me!!! 4.81 Million
The housing market is about 14-18% of our U.S. GDP.
The US GDP (Gross Domestic Product) - measures our national economic activity. Like our nation's income and what we produce at that moment.
An Alarming number came out last week that scared the heck out of me: 4.81 Million Homes sold in July 2022.
Why is that scary? That's a significant number, right? 4.81 million homes sold sounds excellent! But let's always take things into context.
In December of 2021, the US sold 6.48 Million Homes. That is a whopping 25.77% drop in 7 months. Not refinance of homes, but homes sold!!! Now, let's go back because people could argue that it could be seasonal.
The last time the numbers were this bad for housing sales was May and June of 2020. Then, the pandemic's peak was when most metropolitan cities got shut down, businesses were closed, and downtown San Francisco was a ghost town for the first time in history.
April 2020 = 4.33M
May 2020 = 3.91M
June 202 = 4.72M
We are currently at 4.81M !!!! Similar to the peak of pandemic levels. The last time numbers were this lousy pre-pandemic, I had to go back to January, February, and November 2015. Seven years ago!!!
We need to monitor this number for two main reasons:
1. To see how the housing market could deteriorate across the country, or accelerate throughout the U.S. This is a good indicator of the housing market heart beat month by month.
2. U.S. GDP will decline as housing sales decline. 25.77% drop in housing sales equates to about 4% of our US GDP (using housing as 16% of our US GDP). A 4% difference in our GDP equals more than the GDP of Singapore, Greece, and New Zealand combined.
As mortgage rates rise, I see the housing sector getting hammered with lower sales volume, further exacerbating housing value and affecting housing jobs and national GDP.
This deteriorating housing sales number is a sign of our slowing economy and wealth decline for homeowners. I'm concerned about the decline in sales will result in a decline in housing value and a decline in housing value could reduce the value of each family's assets. This is why this decline scares the heck out of me... it's might just be the beginning.
I will monitor this number very carefully and will keep everyone updated since the media haven't been focusing on this indicator much. Please like and comment if you find this helpful.