Erdmann Housing Tracker · Housing & Cities
TIER 4 Mon, 15 Sep 2025 18:41:14 +0000
A timely example of the potential for differences ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ | | ---|---|--- | | | Forwarded this email? Subscribe here for more --- --- # The New Business Cycle: Epilogue ### A timely example of the potential for differences | | Kevin Erdmann --- | Sep 15| | | ∙| | Preview ---|---|--- | --- --- | | | --- | | --- | | --- | | --- | | READ IN APP --- These comments from Moody's chief economist Mark Zandi are a nice example of the interesting mysteries that currently encircle the American housing market. I think a full understanding of the points I made in the recent series of posts will be helpful for navigating this market, and may give you a leg up even on the most sophisticated analysts, investors, and operators in the market. Here are the title and subtitle of the article: > **Housing market'red flare': Moody's chief economist sees home price declines spreading** > > Mark Zandi: 'The housing downturn to date has been mostly about the depressed existing home sales. New home sales, housing completions, and house prices have held up well--that's about to change.' And here are key comments. > But now, the housing market could be headed for even more weakness. > > One of the clearest tells, according to Zandi, is that builders are now postponing land deliveries--a move that typically precedes a drop in construction activity and could mean fewer starts and completions in the quarters ahead. > > It's not surprising that homebuilders are pulling back, given that unsold inventory just hit another 15-year high. Figure 1 is a chart of home inventory and new home sales that I think nicely lays out the binary conflicting clues on the condition of the current market, creating opportunities to zig when even the smart counterparties are zagging. | | ---|---|--- Figure 1 The seemingly obvious story to induce from Figure 1 is that rising interest rates after 2021 caused sales to plummet, and builders responded by reducing the number of homes under construction. But the decline in demand has been so steep that the inventory that they have continued to build is stacking up, unsold. And, so, the reckoning will keep getting more dangerous the longer we go along this path. And, things like builder incentives and interest rate buy-downs are doing just that - making the eventual reckoning deeper because it is getting postponed. It's hard to fault anyone for thinking that description of the market is obvious. It looks obvious if you don't poke around at the data too much or ask questions about the occasional oddity in the data. And how would you know to ask those questions before you know that the answers to them are important? Of course that narrative is entirely wrong. Admittedly, the counternarrative I laid out in the recent series of posts is a bit complicated, and it requires a complete rethinking of the 2008 crisis, which is where all of my work on this topic started. In the month to month, the details are pretty simple, but I think understanding the complicated counternarrative about 2008 might be necessary to be able to know what simple facts you need to notice and track in the monthly data updates. The hard part is knowing what to ask. Below the fold, I will discuss the comments in the article above, and I will ask the questions that Erdmann Housing Tracker subscribers know to ask. Upgrade to paid ## Continue reading this post for free in the Substack app Claim my free post Or upgrade your subscription. **Upgrade to paid** --- | | | Like --- | | Comment --- | | Restack --- (C) 2025 Kevin Erdmann 548 Market Street PMB 72296, San Francisco, CA 94104 Unsubscribe