The US Housing Market Is In A Price Bubble (Again)

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.

Foul Powell! Mortgage Applications Decreased 3.8 Percent Week-over-week

Foul Powell on the prowl!

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.

Case-Shiller National Home Price Index Falls For 3rd Straight Month In May -0.3% MoM (Despite Fed Money Printing)

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).

Despite continued money printing by The Fed.

China, Fauci And Home Prices? Mortgage Demand Plummeted With Covid As Federal Spending Soared (New Home Sales Declined 6.6% YoY In June)

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.

Simply Unaffordable! US House Prices At All-time High Relative To Inflation (At Least Wage Growth Is Higher Than Home Price Growth Under Trump)

Housing in the USA is simply unaffordable!

House prices have exploded since Covid, primarily due to massive Federal spending.

In terms of YoY growth, average hourly earning are exceeding home price growth.

Affordable housing is difficult to achieve at the national level since local politicians control local economies badly. Think LA Mayor Karen Bass who is taking Pacific Palisades which recently burned down and wants to build multifamily housing for low income households. This reminds me of the folly in Long Branch New Jersey where they built low income housing on the beach front. It failed, of course.

Doctor, doctor, we’ve got a bad casing of unaffordable housing.

Here is a picture of US affordable housing policy.

CPI: No Inflation In June, But Shelter Prices Up 3.8% YoY (Foul Powell On The Prowl)

US prices rose 0.3% MoM in June according to the Bureau of Labor Statistic (BLS). And on a YoY basis, inflation rose 2.7% while core inflation rose 2.9%.

Supercore inflation was up 3.017% YoY.

As of May, import prices rose a scant 0.0% MoM and 0.2% YoY.

Shelter rose 3.8% YoY in June while gas utilities rose 14.2%.

And on this news, the yield on 30-year Treasuries rose 5%.

Not a chance that Foul Powell will cut rates now.

The Upside To Tariffs (Trump’s Tariffs Generated Over $25 Billion In Tariffs Under His Second Term)

The U.S. has already brought in nearly $73 billion in revenue from tariffs so far this year, compared to $77 billion in tariff revenue for the entirety of 2024. In Trump’s second term, tariff revenue is over $25 billion.

So much for the hysteria over a stock market crash and massive increase in inflation. Particularly “economists” who say this nonsense. Who are those guys?

Gov’t Gone Wild! Purchasing Power Of US Dollar Declined 97% Since 1915, US Debt Up 317% Since Jan 2009 (M2 Money Up 210% Since Jan 2009)

It’s Gov’t Gone Wild! That includes The House, Senate, President and Federal Reserve.

The purchasing power of the US Dollar was $1004.4 on 1915-03-01. By 2025-05-01, the purchasing power fell to $31.1, a loss of 97%. Public debt since the last year of GW Bush, Obama/Biden (with a brief hiatus with Trump) rose 317% since January 2009.

M2 Money printing grew 210% since January 2009.

The music??

Debt Slavery! As Of Q1 2025, GDP Growth Equalled Gov’t Debt (Unfortunately, Big Beautiful Bill Doesn’t Cut Enough Spending)

Finally, US government debt growth (YoY) was approximately equal to US nominal GDP growth in Q1 2025.

Unfortunately, the BBB (Big Beautiful Bill) is projected to add $3.9 trillion of debt. Unfortunately, there are insufficient spending cuts in the BBB. And the Senate just nixed kicking illegal immigrants off of Federal healthcare programs.

Unfortunately, GDP growth is only expected to be modest with debt growth once again rising faster than GDP growth. As Diane Feinstein once said, politicians are elected to spend money. This, of course, was a ridiculous statement embraced by spend-crazy Democrats and RINOs.

So, Congress has committed American taxpayers to debt slavery.

New Homes For Sale Near Financial Crisis Highs (Big Short Redux?)

I sure hope this isn’t a repeat of the financial crisis! But new homes for sale have ballooned to financial crisis levels.

Home sales have dropped below year-ago levels, presaging likely declines in mortgage supply and turnover. With completed-home inventories hitting post-global financial crisis (GFC) highs, regional surpluses are emerging as key home-price factors, setting the stage for widening pockets of price weakness in the months ahead.

Contributing to the glut of new homes for sale is the rising prices AND higher mortgage rates.