I expected a few prints below 5.84 million and so far this year we’ve only gotten one print below that level. This means that with only two reports left so far in 2021, every existing imprint of existing home sales was above the overall closing level of 5.64 million in 2020. Not bad considering the low inventory and all the unhealthy home price growth we’ve seen. since the beginning of 2020.

If home sales moderate from these levels it would be perfectly normal to me as it is clear that the existing home sales market is now exceeding my expectations with these last two sales prints. So much for the 2021 forbearance crash bros — the second half of the 2021 housing crash YouTube fanatics. Mother demographics and low mortgage rates could crush many American bear hearts, just like they did in 2020 and 2021.

The main reason housing has outperformed in the years 2020 and 2021 is that we just got an increase in demand from the most significant demographic patch ever in history, as 27-33 year olds are the largest group ever. Then, if you add up the ascending, descending, cash and investor buyers, we should be able to always have total home sales – both new and existing – at 6.2 million or higher. This is something that could not happen in the years 2008-2019. We’re well above my total sales of 6.2 million and that means both years have been a noticeable beat in my eyes.

For every positive there is a risk of a negative and we’ve seen that risk play out in house price growth. My biggest concern for the years 2020-2024 was that house price growth could overheat and we’ve seen that happen, which is why I continue to say that this is the most unhealthy housing market post-2010. Not because of a credit market bubble, but because market days are still too low, triggering a bidding war that is of no use to anyone.

By POMEGRANATE: The median price of existing homes for all home types in October was $353,900, up 13.1% from October 2020 ($313,000) as prices rose in every region.

A dataset that I like to keep an eye on in terms of progress, because what I want to see in the B&B housing market (boring and balanced) is days on the market growing. Now we have some good news, the days in the market have grown by one day since last month’s report, from 17 to 18 days. I know it may not sound like much, but still, progress is progress. I’d like to see the days on the market turn 30 days, so we’ve got a long way to go for that to happen.

POMEGRANATE: In October, new buyers accounted for 29% of sales; Individual investors bought 17% of the homes; All-cash sales accounted for 24% of transactions; Distressed sales represented less than 1% of sales; Properties typically remained on the market for 18 days.

Another theme of mine earlier this year was to expect negative year-over-year data in the MBAs purchase requests in the second half of 2021. This is only due to the high compositions we had in the second half of 2020 – all because of the makeup demand of COVID-19. I saw a lot of housing novice bears trying to push this as a reason why homes would deteriorate hard in the second half of 2021. This is a terrible rookie mistake made by people who don’t have the experience to follow housing data properly. So the negative year-over-year data in home sales shouldn’t be a shock anymore.

POMEGRANATE: Sales were down 5.8% from a year ago (6.73 million in October 2020).

There has been a lot of hype that this entire housing market is driven by investors. Dear Sir, This Micky Mouse act is common, but the real driver of housing is mortgage buyers. When mortgage buyers fade — and they will at some point as mortgage rates get higher — so do home sales. We don’t have a Wall Street moat for housing. The data of the MBA purchasing application had become more solid since 11 weeks ago and no one really noticed.

It’s sexier to say that investors are driving up house prices rather than all those pesky mortgage buyers, which is by far the biggest part of housing demand. It just doesn’t sell well to say that millennial mortgage buyers are driving home prices to record highs. Yellow journalism, gloom-and-doom clickbait sites, and ideological far-left and right-wing takes get a lot of attention, but that doesn’t mean they’re right.

Since the summer of 2020 I had said that housing is slowing down, but it has to mortgage interest above 3.75%, which means that the 10-year yield should rise above 1.94%. My 2021 forecast didn’t have that reality in play. In fact, the AB recovery model range of 1.33% – 1.60% held up for part of 2021. Everything looks remarkably good to me with the bond market. At the time of writing this article, the 10-year yield is at 1.60%. Priceless, isn’t it?

For the rest of the year, I’m really paying attention to one thing: I’d like to see stock holding up better than last winter. I don’t want the inventory to collapse like it did last year and spring 2022 to start at that level. So that’s my focus for the last two reports and weekly inventory tracking.

Overall, I’d say existing home sales are outperforming for now and if sales stay above 6.2 million I’ll be very impressed. If the sales trends drop a bit in the coming months, that would align with my sales trend levels. The main story for 2021, however, is that home sales demand will end higher than in 2020, led by US mortgage home buyers.