The latest expert analysis on housing market conditions says that while it's "too soon to panic" about current housing conditions, "a deeper drought is bad news for just about everybody."
UBS analysts report, "The incongruity of the spending on housing with the rest of the economy is a red flag," adding that the lack of affordability in the housing market may signal underlying overall economic weakness, "Unwillingness to spend on large, long-lasting items like housing may signal susceptibility of consumer confidence and spending to adverse shocks."
At the end of 2018, existing home sales in the U.S. "fell off a cliff," stunning market watchers, economists, and experts--the National Association of Realtors' data show that sales had the biggest decline in more than 7 years in December, a 10.3 percent annual drop to 4.99 million. This followed annual declines in November, 7.8 percent, and October, 5.1 percent, Business Insider reports. A recent UBS note says that such stark declines in housing have signaled 9 out of 11 post-war recessions in the U.S.
Banks with large mortgage-lending businesses felt the homebuying malaise take a bite out of their bottom lines last week during fourth-quarter earnings results. At two of the largest bank mortgage originators and servicers in the US, the numbers were more pronounced. At Wells Fargo, mortgage banking revenues fell 50 percent to $467 million in the fourth quarter, while originations declined 28 percent to $38 billion. JPMorgan, meanwhile, saw mortgage income fall to $203 million, a 46 percent drop from the same period last year. Originations fell 30 percent to $17.2 billion.