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Much to call you know the coldest spot up the housing numbers and existing home sales numbers for June fell one point 2%.
As a thirty year rates the mortgage rates climb to new highs over the last two months we're joined right now by American Enterprise Institute resident fellow Ed Pinto.
With some expert insight into the reasons behind the numbers and where this market is going and we we appreciate you being here it because it can be very confusing.
I mean month to month were down but we're still year over year up 15% this would seem to -- like the housing recovery is still pretty healthy am -- wrong.
I think you're actually right Adam I think the number of focus on is the year over year.
Monthly numbers are pretty volatile.
Plus I think the expectation.
What this month's number was going to be her last months -- is -- be was -- it was unrealistically.
I follow one of the experts to came -- with a number.
Last week that was.
Much closer to the final number then the the numbers that we're considered.
I think that we've seen run up as you mentioned in an interest rates.
Which I think is actually healthy we were experiencing a market that.
Was -- a bit.
And irrationally current exuberant if you -- -- -- NN NN dot everywhere right in some markets.
And -- were real problems before we're start to start multiple multiple bids and White House thought it was actually like I -- forgive me for interrupting yet cash offers actually places that are really -- in California where don't even bother getting a mortgage because people were jumping -- have a right as a realtor we've done stories on Fox Business.
What officially -- a -- be able to see it but it comes out of the research we did review.
On the supply it's something like I had just a little over a five month supply of homes.
That's a long it would take to sell all of the existing homes right now on the market.
Explain to me why this is good what what's good about this and perhaps what might not be good about this.
Well and in May it was.
-- five months inventory and that's considered.
A point where the it's more of a seller's market.
Rather than an even.
And so you end up with these says supply demand.
Mismatches which when combined with these very low interest rates drive house prices up.
-- that may sound like a great thing for somebody selling a house but if you try to buy a house.
Driving these prices up through very low interest rates isn't helping.
-- you know group of people trying to buy houses it's creating artificially.
High prices so what we're seeing.
Is it is a bit of a slow down as.
The the inventory increases to five point 296.
Is considered basically in balance.
And so I think -- want to get something a little closer.
-- closer to six -- and that along with these higher interest rates well I keep reading analysts saying that higher interest rates are manageable up into about 6%.
But for most people.
You know you tack on.
A 1% increase in an interest rate at 2% increase you're talking about a 1020300.
Dollars more a month depending on the size of the loan.
That would seem to me -- if it's gonna crank the housing market will it.
Well again I think what we're gonna see is it's going to hold back some of these.
Unrealistic increases that have been happening we're running -- ten or 12% a year which is not sustainable particularly considering incomes are going up.
Just one -- 2% a year or so we've we've got the cart before the horse here we -- at a house prices going up.
In many markets too quickly.
Relative gain comes and I think having and that was largely -- the number of factors that.
Certainly these extraordinarily low interest rates that the Fed is engineered was a big part of it getting something closer to.
Normal which is where today we're at about four and a half up for about three and a half.
That that's a more normal situation this is also very important for the broader.
The he's very low interest rates not only -- mortgages sort of create distortions throughout the market.
And I think the Fed has experienced when they just can't pick tapering and that's the word they used from the market reacted very violently.
We need to move the market away from all this stimulus artificial stimulus of the Fed's doing.
And the sooner the better I'm hoping the Fed does not have round heels.
Now this tape.
Are well ahead I gotta tell you at that point we're gonna cut it short but I think some people your analogy of the cart before the -- some people would say when it comes to the Fed no matter what side of their policy -- on.
They're not of course they might be a donkey that's as far as all -- on that one minute into thank you very much all the -- -- --
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