It's looking increasingly likely that housing has peaked this cycle. Year-over-year sales are down the second month,

The Econoday economists missed the mark badly this month on existing home sales.

Single-family home sales fell 3.0%. Overall sales fell 2.5% for the month and were lower than even the lowest estimate.

Year-over-year sales are down 1.4%. Last month sales were down 1.2% year-over-year. Sales have pretty much stagnated since June of 2015!

Mortgage News Daily reports Existing Home Sales Reverse Course, Down 3%.

Economists polled by Econoday were not looking for greatly improved numbers but results even missed that target. Estimates ranged from 5.48 million to 5.64 million. The consensus was for no change from the March 5.60 million number.

Single-family home sales were down by 3.0 percent to a seasonally adjusted annual rate of 4.84 million from 4.99 million in March and are 1.6 percent below the 4.92 million sales pace a year ago. Condo and co-op sales continued their recent strong performance, rising 1.6 percent to 620,000 units, level with sales in April 2017.

What NAR called "staggeringly low inventories" of available homes again got the blame for the disappointing sales volume even though that inventory rose sharply from March. Lawrence Yun, NAR chief economist, says "The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home," he said. "Realtors® say the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford."

The median existing-home price for all housing types in April was $257,900, up 5.3 percent from the median of $245,000 a year ago. The increase marks the 74th straight month of year-over-year gains. The median existing single-family home price was $259,900, a 5.5 percent annual increase and condo/coop prices rose 3.4 percent to $242,500.

The much-lamented inventory of available housing stock at the end of April was 1.80 million homes. This was a significant 9.8 percent uptick from March but is still 6.3 percent lower than the 1.92 million homes for sale the previous April. For-sale listings constitute an estimated 4.0-month supply at the current rate of absorption compared to a 4.2 month supply last year. The inventory has fallen year-over-year for 35 consecutive months.

Not an Inventory Problem

Lawrence Yun repeats the same nonsense month after month.

Supposedly 5 months supply is normal. If sales continue to decline, we will have 5 months of inventory. What would he say then? Who knows, but I suspect we will find out.

This is not an inventory problem. The problem is affordability.

Affordability Cycle

With prices rising for 74 consecutive months, young people cannot afford to buy homes. Sellers want more for their homes than they can get. They need more than they can get because they will have to pay more for a replacement.

There is plenty of supply, just not at prices sellers want or buyers can afford.

In the next downturn, the number of would-be buyers will decline and the lack-of-inventory mirage will vanish.