This of course is the single most important indicator in ALL of the U.S. With a failure on the housing level, we're doomed to be eating sand for eternity, as great dust bowls take over the plains states.
Then there's the existing homes sales... which I have relegated to the "useless" file long ago:
In all seriousness, existing homes do fairly little for the overall economy. The home is already built. There are some commission related jobs involved. But, it is the new homes data that perks up my attention when looking at the U.S economy. There are jobs involved in the completion of the home. However, we've been so over-inflated in this area the past couple of years, that it only makes sense we'd see some moderation. In fact, I won't start getting concerned until we hit the 750 area. Yes, that low. Anything below that, would be below normal. I look at the activity from the past couple of years as so out of line, that we need to get back to what is in line. That area looks to be around the 750 area.
Look at the chart above. In the late 1990's, there was some fairly strong economic activity here in the States. Yet, all the further up we got was about the 950 level. I'd think that a pullback to those levels as being a "normalization" of the industry. From there, then we'll see how the industry fares. But, with the economy showing signs of continued firming, even in the face of higher interest rates, I wonder if we'll even get that low at all.
We're still seeing support in the form of mortgage applications. Here's the latest chart on such:
The past couple of weeks have seen overall applications increase. Someone once asked me if I knew how many of these applications actually turn into loans. That was a good question that I think at the time I didn't have an answer to. As it turns out, I still don't have that answer. But, I can educatedly guess at it. Lots. You aren't going to go through the entire application process until you are getting pretty close to getting the loan. You're already likely to have had your credit report run, and a broker that thinks they can get it done. There are probably only a few that are so desperate to get some kind of loan that they will submit on a hope and a prayer. So this support shows me that there is overall positive support.
I don't see the housing industry as the be all, end all in the U.S. economy. Nor do I see the current housing situation as being as bleak as some, including a few members of the Federal Reserve, see it. We're getting back to normal. There may be a few bumps in the road until we get there. But, I think we're likely to weather this far greater than most are willing to give the economy credit to.