Posted originally on the conservative tree house on May 25, 2021 | Sundance | 153 Comments
As we have watched the economic conditions for Main Street businesses and blue-collar workers continue to worsen, the horizon grows ever more dark. Last month when we reviewed the inflation data we noted as follows:
“The rapid increases in the price of food and gasoline are hitting the middle-class hard. This will have a downstream effect on more luxury items and durable goods. Spend more on food/gas and you might not be able to purchase that new table you wanted. Durable good inventories increase and layoffs in those sectors begin.
It will be very interesting to watch how the housing market responds over the next few months. If the trendline continues we should see a considerable softening in home sales, again depending on region, as the inflation hits the working class” (link)
Today we get the first set of housing data to accompany the inflation forecast: “New home sales dropped 5.9% to a seasonally adjusted annual rate of 863,000 units last month, the Commerce Department said on Tuesday. March’s sales pace was revised lower to 917,000 units from the previously reported 1.021 million units. Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, at a rate of 970,000 units in April.”
[…] “The median new house price soared 20.1% from a year earlier to $372,400 in April. Sales were concentrated in the $200,000-$399,000 price range. Sales below the $200,000 price bracket, the sought-after segment of the market, accounted for a mere 2% of transactions last month.” (link)
Some of the drop is likely attributable to low inventory in hot markets like Florida. However, that said, inflation, high unemployment and lower wage rates are hampering the ability of blue collar workers to afford entry level homes (as noted above). Financial security is now a concern as real wages continue to drop and inflation bites hard into working class incomes.