(Un)Comfortably Numb?

Recent housing data registered a nearly imperceptible blip on market-watcher screens as those in the media focused intently on the signing of the memorandum of understanding with Iran. Promises of an opened Strait caused the markets to dance and oil prices to plummet. Warsh doused a little cold water on the party with his hawkish stance and refusal to play the dot plot game. What will the market do with one less tea leaf or chicken bone to read (pick your mystical practice)? And what of that memorandum of understanding which swooped in to save the markets just before a long holiday weekend?

Up, down, up, down we go. Perhaps you chose to focus on the future of space exploration instead since my last post, ignoring politics and the economy as the rollercoaster is just too jarring. The build-up to the SpaceX IPO was a sight to behold. Newspaper articles talking about the 4,000 newly minted millionaires or Musk’s net worth at a trillion abounded. Meanwhile, tales of grocery store baggers and Uber drivers trading tips and dreams of making it rich through the IPO circulated in the airwaves as retail excitement grew. The juxtaposition of the ebullient exuberance with the hard realities of the lived experience of many Americans near the bottom of our K-shaped economy is surreal to see. Even those at the top of the K feel that the political and economic systems are stacked against them:

While middle- and working-class Americans signaled the most economic strain, the pessimism felt by the upper classes stood out for having worsened, despite the ways the economy has favored them (my emphasis). Nearly two-thirds of people who consider themselves upper class or upper-middle class have $150,000 or more in annual household income, including 25% with incomes above $250,000.

The media has done its level best to ensure we are fighting with one another, but what this survey shows is that even those who have been on the receiving end of the benefits do not feel good about the future. The degradation in the faith of an achievable American dream for our youth should scare the pants off politicians and bureaucratic leaders. While those 4,000 lucky SpaceX employees may have struck gold, most Americans will not benefit in the booty generated in this Gilded Age. Let’s be honest, though. Likely those 4,000 have already leveraged their future. I’ve seen it so many times before. The money guys find them early and ensure the soon-to-be millionaires have all the access they need for their new house with multiple garages, their boat, their cars. By the time payday strikes, there is nothing left but debt service. For those that live in reality, I offer Exhibit A and a good thread that provides a more cautionary perspective on prospects for “generational wealth” through SpaceX stock ownership.

And then there are those of us who have become completely numb to world skirmishes and schizophrenic markets, choosing instead to follow the World Cup and/or Freddy from Germany who is traveling the United States, experiencing and tweeting about all of our wonderful weirdness. I have said many times - and I believe this absolutely - to love our country the way it should be loved, you have to take a road trip across it. I can admit to enjoying these posts as well as some of the games. It’s interesting to think of our world history and watch these matches at the same time. Watching the Norwegians gave me an appreciation for those who had to see the Vikings come to shore. S c a r y.

Since my last post, the Nasdaq is up 3.14% but has not yet reached its former peak. With three weeks behind us it seems likely that June will get its act together and summer will take on its normal hue of fairly green trading as traders and the like escape to the Hamptons or some such place. What does that mean for housing? The housing season unfortunately does not look like it will break-out from the doldrums despite some headlines claiming otherwise. For perspective, May existing home sales non-seasonally adjusted came in flat YoY and were up 9.6% MoM. This is the selling season, and sales should be surging from April to May - on average since 1999 by 10.36%. This “surge” was less than the average and was the 4th worst May behind 2009, 2011 and 2020. Standalone existing home sales YTD are now 0.71% ahead of 2025 but -2.07% behind 2024. The National Association of Realtors (NAR) followed up existing home sales with a positive Pending Home Sales report containing overly-positive commentary. I’ve mentioned here several times how I watched my former leadership read similar headlines from 2007-2011, believing each month in the industry “insider” hot, delusional take. Pending Sales should be up both YoY and MoM. Last year we were in the middle of the fallout from the Tarriff Terror and rates were indeed higher. 30-Year Mortgage rates averaged 6.81% through May of last year compared to 6.23% YTD through May 2026. Sales of course should increase MoM from May to June as the season historically reaches peak sales in June. I promise when the housing market shows signs of sustainable thawing on a national level you will be the first to know.

As always, the particulars under those statistics tell the true tale. Below I will discuss all the gory details found in the NAR data including the regions that are looking shakier and shakier. Slow and steady she goes but the path remains clear until our affordability issues are addressed. Speaking of affordability, many have conjectured just how much immigration contributed to sky-rocketing home prices. A recent study from the Dallas Fed makes some interesting observations which we will review. In addition to May M3 regional sales, price, inventory and delisting (new metric) results I’m also providing a detailed analysis into market strength for the 29 markets I track across the country with populations over 500K. Clear themes are emerging, and we are reaching the point where more tangible assessments can be made about the near-term prospects in these markets based on fundamentals such as number of underwater properties, for-sale and rent inventory, tax liens, auctions and pre-probate notices (a link to the data will be provided). And, finally, for those interested in Commercial Real Estate, I will share my recent findings from a review of the state of things in student housing; an asset class once seen as untouchable.

Let’s begin…