Even with the Fed expected to raise rates in December, Americans kept the housing bubble chugging with record numbers in November
While most Americans only give a modest care to the rate of interest they pay for their mortgages since the current rates are at or near historic lows, three rate hikes in 2017 by the central bank has done little to cooldown the housing bubble the Fed helped regenerate over the past eight years.
In fact with the November numbers out for new home sales crushing expectations to the point that November saw the highest monthly increase in the past 25 years, even the colder winter period is not dissuading buyers from investing in real estate that has surpassed price levels from the peak of the 2007 bubble, and subsequent housing collapse.
Earlier we¬†discussed that US personal savings tumbled to the lowest since 2007, and now we can also conclude that one of the things Americans splurged on last month was New Homes, because¬†according to the Census on Friday morning,¬†new home sales in November soared by a near record 109K to 733,000 from a downward revised 624,000 in October (from 685,000 previously).
On a year over year basis, new home sales soared by a whopping 26.6%: –¬†Zerohedge
Perhaps the most ironic thing about these numbers is that a report out for November from the Bureau of Labor Statistics (BLS) shows that home prices are climbing at twice the rate as wages are.¬† Meaning Americans aren’t really more able to afford new homes, but are still putting down mortgages on them anyway.
As we get ready to enter into a new year, the American consumer appears to be partying like its 2007 as their debt levels and willingness to spend well beyond their means is a psychological trend which helped signify their lack of readiness for any economic or financial crash that might come along.¬† And it also means that the Fed has accomplished their jobs in making people believe that asset prices will never go down, setting up the potential for a crash in which the American consumer and investor is already ‘all-in’ on.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.