Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
People get ready! Powell and the Fed might actually lower their target rate at The Fed’s Open Market Committee meeting on September 17.
The Fed hasn’t touched rates under Trump, but were hyperactive under Biden.
Let the good times roll? I wonder if Jay Powell and the other Fed honchos are taking Jackalope Rides in Jackson Hole, WYO?
Is This My Free One-Way Bus Ticket To Cleveland? Cleveland is leading the nation in home price growth at 4.7% YoY. Followed closely by Hartford CT, Louisville KY, Detroit MI and Buffalo NY.
Well, if The Fed would stop printing money (M2), home prices would decline. But The Fed will keep on printing!
Of course, the top 1% of net worth households are doing quite well thanks to The Fed’s eternal money printing.
On the commercial RE side, US office vacancy rates are approaching 20%.
Lastly, Tampa FL is the slowest growing area. Actually declining at a rate of -6.2% YoY.
Celebrate, dance to THEIR music. Housing construction is massively overregulated leading to a glut in unaffordable housing being built.
I mentioned the glut of new builds in my post yesterday. Construction remains over-regulated driving up the costs of new builds
As you can see, new single family homes for sale is 511,000. But single family homes under construction was 627,000 units in June.
Not surprisningly, housing completions were up in June, but generally down since late 2024.
Multifamily starts soared in June (red line).
Let the good times roll! Booming business applications under Trump and calm inflation.
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.”
The July jobs reports for the US revealed some interesting factoids, such as the BLS Commissioner, Erika McEntarfer, being fired. Note that McEntarfer was BLS Commissioner since January 29, 2024. But under McEntarfer, downward revisions were the norm except for election season (Oct 2024 – Dec 2024) when there were upward revisions. But once Trump was elected and took office, all jobs report revisions were negative.
Native born workers rose while foreign born workers declined.
And for the 6th straight month, Federal jobs declined.
And with the poor jobs report that will surely be revised upwards.
The market is pricing in a rate cut at the 09/17/2025 FOMC meeting.
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.
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 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.
US existing home sales dropped 2.7% MoM (vs -0.7% MoM expected) in June leaving existing home sales unchanged year-over-year.
The median sales price increased 2% in June from a year ago to a record high of $435,300.
Meanwhile, The Fed keeps on printing money.
This is a new world for housing and mortgage finance. Outrageous, unafforable housing for millions.
Confounded Interest - Anthony B. Sanders 
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