The new home sales data was just released this morning are pretty bad for real estate market. To summarize:

  1. Home sales are running at 1,234k annual rate, which is a whopping 37% below the annual construction rate of 1,940k homes. There are 700k of new homes coming this year that just nobody wants
  2. The median price of new homes slumped by whopping 4% in just one month, or 49% annual rate
  3. Taking a longer trend, the median price plunged 6% since February, i.e. it is falling at more realistic, but still horrible rate of 18% per year

The 18% of annual price decline across the whole country is unprecedented. We never had a meltdown of this magnitude. The only similar development in history is Japanese asset price bubble.

Just be prepared.

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