Hello friends. Last month was similar to April in that while supply and demand both remained well below pre-pandemic levels, the relationship between the two creeps further toward the 2015-19 norm. See the graphs below — supply, demand, and supply-vs-demand (in the form of months of inventory):

This loosening of the market was not enough to halt the recent price rise. Single family home prices notched a new high in nominal terms, and they are not too far from the inflation-adjusted high reached in 2022. 

While inflation-adjusted prices are below the peak, inflation-adjusted monthly payments have risen to tie their previous peak. 

I continue to think this is an unsustainable state of affairs as described in the valuation updates. (Eek, it looks like we’re overdue for another one of those). But it could take quite a while to sort itself out.

More graphs below…