The US housing market is a changeling, going from a mega glut during the financial crisis to a tight market, then back to a glut … again. In fact, there are 511,000 new homes for sales in the US, the highest inventory since the financial crisis.
Combine all-time high home prices with RELATIVELY high mortgages, and we have an affordability crisis once again.
While we have the most new homes for sales since 2007, mortgage rates are about the same as in 2007 (orange line). But home prices are 87.5% higher today than in 2007!
When government gets involved, what could go wrong?
The Fed didn’t try, but mortgage rates fell and mortgage applications rose 10.9% week-over-week.
Mortgage applications increased 10.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 8, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 10.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 17 percent higher than the same week one year ago.
The Refinance Index increased 23 percent from the previous week and was 8 percent higher than the same week one year ago.
The 30-year fixed mortgage rate declined to 6.67 percent last week,which spurred the strongest week for refinance activity since April. Borrowers responded favorably, as refinance applications increased 23 percent, driven mostly by conventional and VA applications. Refinances accounted for 46.5 percent of applications and as seen in other recent refinance bursts, the average loan size grew significantly to $366,400. Borrowers with larger loan sizes continue to be more sensitive to rate movements.
The latest inflation report continues to show no negative impact from tariffs. Core goods prices were up 0.2% in July. They are up just 1.1% over the past 12 months and are actually up a lesser 0.8% since President Trump began phasing in tariffs.
Business applications are booming under Trump’s economy.
While consumer prices are calm (2.7% YoY).
Shelter inflation is higher than the average price increase (3.7% YoY).
The US housing market is finally slowing down in terms of price growth. But this is after 3 Federal government-fueled house price bubbles.
In addition to record-high housing prices, mortgage rates are higher than levels going back to 2006.
Throw in the “woke” movement, and we have a problem. The percentage of 30-year-olds who are both married and homeowners has plummeted to the lowest level since 1950.
Simply lowering interest rates won’t fix this problem. Much of the housing “crisis” is due to local and state level politicians and their restrictive housing policies. Like LA Mayor Karen “Venceremos Brigade” Bass allocating the burnt-down Pacific Palisades area on the Pacific Ocean to “affordable housing.”
Yes, the US housing market is in a price bubble. If we compared home price growth with median earnings.
The financial crisis was spawned by a home price bubble where home price growth was faster than median earnings growth (see Bubble 1). After home price growth cooled in 2007-2009, the cycle started again (Bubble 2). But the current bubble (Bubble 3) is related to the Covid outbreak and massive spending binge by Congress (and The Fed). Notice that median earnings dropped (green line) post Covid.
But while we have normalized home price growth and median earnings, the LEVELS are still unaffordable for millions of households.
Poor Bill Pulte (FHFA Director). He has to work with an uncooperative Fed under Foul Powell, and local politivcians like Greasy Gavin Newsom (Democrat Gov of California), JB Pritzker (Democrat Gov on Illinois), Kathy Hocul (Democrat Gov of New York), and the assorted lunatic Mayors like Karen Bass (D, Mayor Los Angeles), Zohran Kwame Mamdani (D, presumptive Mayor New York City), etc.
Mortgage applications decreased 3.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 25, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 17 percent higher than the same week one year ago.
The Refinance Index decreased 1 percent from the previous week and was 30 percent higher than the same week one year ago.
Between Powell keeping rates high and Biden’s grossly incompetent management, the mortgage market remains in the doldrums.
US home prices fell for the 3rd straight month In May. The MoM decrease in the seasonally adjusted (SA) Case-Shiller National Index was at -0.29% (-3.5% annual rate).
China unleashed the Wuhan virus on the globe, Anthony Fauci convinced Congress to binge spend like drunken sailors on Covid prevention and relief. Homes prices soared, mortgage demand sank and nothing has been the same.
Here is a chart of the Case-Shiller national home price index post Covid outbreak and the hysterical overreaction by Congress and the Administration (including Anthony Fauci).
Another example? New home sales are down 6.6% YoY.
Who do we blame? China? Yes. Anthony Fauci? Yes. Congress? Yes.
Confounded Interest - Anthony B. Sanders 
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