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[ad_1] September new home sales beat expectations, but don’t get too excited. While monthly supply rose in this report, the previous reports were all revised lower and sale levels are still historically low. New home sales are now below the recession levels of 2000 and have fallen all the way to 1996 levels, when interest rates were near 8%. As I have always tried to stress with home sales data, we have not had a massive credit sales boom like the one we saw during the housing bubble years, so we can’t have a similar huge sales bust working from such historically high levels. This is a positive in the sense that this downturn is more manageable: sales weren’t elevated with a credit boom boosted by exotic loan debt structures, so finding that bottom level in sales is more reasonable. From Census: New Home Sales of new single-family houses in September 2022 were at a seasonally adjusted annual rate of 603,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.9 percent (±15.2 percent)* below the revised August rate of 677,000 and 17.6 percent (±15.9 percent) below the September 2021 estimate of 732,000. During the housing bubble years, new home sales, housing starts, prices and credit demand boomed to an extreme level. This was a very unhealthy setup because demand couldn’t sustain itself, and new home sales and starts were set up for a significant, rapid decline. As you can see below, we aren’t working from elevated levels today. This doesn’t mean sales can’t fall further from here, especially with rising mortgage rates. However, it shows that the builders are better at managing their supply and demand imbalances compared to the housing bubble years. We saw some stabilization in the data when mortgage rates fell from 6.25% to 5%. However, now we are dealing with a 7% mortgage rate. Monthly supply grew in this report, and this data line has always been crucial for my economic work over the past 10 years.  My rule of thumb for anticipating builder behavior is based on the three-month average of supply: When supply is 4.3 months, and below, this is an excellent market for builders. When supply is 4.4 to 6.4 months, this is just an OK market for the builders. They will build as long as new home sales are growing. The builders will pull back on construction when the supply is 6.5 months. From Census: For Sale Inventory and Months’ Supply, The seasonally‐adjusted estimate of new houses for sale at the end of September was 462,000. This represents a supply of 9.2 months at the current sales rate. We are far from getting the new home sales sector out of a recession, as the monthly supply is at 9.2 months. This is a big difference from the existing home sales market, where supply has only been 3.2 months, even with the enormous demand this year.  Builders learned their lesson The other issue with the builders’ supply is that it took forever for the builders to build homes. When rates rose back in March, there was a considerable risk to the business model with many homes under construction. The builders are dealing with more cancelations this year than last year. With mortgage rates spiking so much in a year, all of those homes that went into contract with rates between 3% to 4% are having issues with rates between 6% and 7%. Some homebuyers simply don’t qualify for the home with the higher rates so their transaction has to be canceled. This is one risk to the builders’ business model: when it takes a long time to finish a home, the rate rise risk is real. The builders are mindful of managing their supply and demand imbalances. They don’t just put their heads down and build, build and build. They need to have the confidence that they’ll be able to sell the homes that they haven’t even started building yet. So, when mortgage rates rise — and they have in a significant fashion — it hits the the builders’ confidence.  The builder supply picture: 1.1 months of supply is finished product 6.0 months of supply is still under construction 2.1 months of homes haven’t even started construction We have 56,000 new homes completed for sale. We have 301,000 homes under construction — this is historically high. The number of homes that haven’t even been started sits at 105,000. For some perspective here, imagine that all the homes that were under construction and those that haven’t even been started yet magically came to the market overnight because Santa Claus and his elves decided to help the builders out for Christmas. Currently, the builders have buyers to occupy those homes, excluding those that cancel the transaction at closing. Assume that all new home buyers cancel their contracts and those homes go into the unsold inventory category, that would push the inventory data up to 1,656,000. Which is still below the four-decade low average of 2 to 2.5 million active listings NAR Total Existing Inventory: 1,250,000 As we can see, the housing market is still in a recession. New home sales are down so much that the monthly supply levels broke a key area for me to where the builders are stopping their new housing construction with single-family homes.  We can also see that we don’t have that many completed homes to start with, and the homes under construction or not even started yet isn’t a big help either. However, the new home sales sector is vital for the economy as construction jobs and big-ticket items are essential here. When rates do fall, we can see that the 5% level brought some buyers into this market. When rates are above 7%, this sector will be more problematic.  For now, the housing recession continues: sales, production, job and incomes within housing all falling together. Until mortgage rates fall, we will still be in

[ad_1] Author, public speaker and former financial services professional Mike Drak wants you to know that retiring is easy; what comes after can be the hard part. In this excerpt from his new book, Longevity Lifestyle by Design, Drak explains why you should craft a retirement vision that goes beyond just crunching the numbers, so you can live an active and engaging “second life.” The new retirement For the past fifty years, retirement commercials have been promoting the “ideal couple” living the “ideal lifestyle” on the beach or the golf course. But this is nonsense. Not every retiree wants to live like that, nor can every retiree afford to.  Watching such commercials causes retirees a lot of stress. Deep down, most people know that retirement—including theirs—won’t look like that. The problem is, most of them have no idea what their retirement will look like. We need to stop watching and believing those hackneyed, clichéd retirement commercials because they will limit our imagination about what we can do and who we can become. The retirement distribution curve As the distribution curve shows, many people, through choice or otherwise, are deviating from the old twentieth century model of full-stop leisure-based retirement, where they suddenly slow down and take it easy; this retirement model is becoming less common because it is outdated and no longer works. In fact, the word “retirement” is far too narrow and is not a good descriptor for what many people are doing today. We need to recognize that and replace it with a better term that reflects what is truly happening and what is possible. Personally, I’m a fan of the term “second life.”  Our “first” life is all about learning, earning and achieving. It involves going to school and then working hard for the next thirty-five-plus years, trying to make as much money as we can to support our family and put some money aside for retirement. Our second life begins when we decide to leave our primary career behind and retire; or maybe that decision is made for you, like it was for me by my employer. The prospect can be terrifying and confusing—or full of possibilities if you plan for it carefully.  Retirement has traditionally been viewed as a finish line achieved after many years of working; in contrast, your second life could be seen as a starting line—a new beginning—a chance at an awesome “second life” based on an optimum mix of work, play and adventure. Like they say, it all depends on how you look at things.  A new study released in May 2022 by Age Wave and Edward Jones, “Longevity and the New Journey of Retirement,” confirms that the way people view retirement is changing rapidly. It’s really important to recognize that retirement is just a phase that was invented, it’s not a natural progression or an essential stage of life. Polling showed that only 27% see it as a time for rest and relaxation, while 55% viewed it as “a new chapter of life.” And 59% of the people polled “want to work in some way during their retirement. They view retirement as an ideal mix of work and leisure. Their primary motivations for working are to stay mentally engaged and financially comfortable.”  If you approach it right, your second life can be your best life; a period of personal renaissance. Your second life can be more creative, more meaningful and more adventurous than your first life was. Think of it as the payoff for all those years of hard work.  As much as I don’t like the word “retirement,” you will still see us using the word repeatedly throughout the book because people are used to that term. But as you read through, think in terms of your second life. Thinking like that will get you excited and give you something positive to work towards. Questions for self-reflection What kind of retiree are you? Where on the bell curve are you in terms of your second life? If you’re stuck in the large middle, what are you going to do to clarify your vision of retirement? When you leave your primary career or employment behind (if you haven’t already), will you have crossed the finish line of retirement, or will you just be embarking on your second life—the ultimate adventure? Takeaways There is such a wide variance for what different people want and need in retirement. Everyone has their own personal definition of what a great second life looks like. People are taking different approaches to retirement depending upon their personal experiences, needs, wants and financial circumstances. There is no one correct answer. Everyone must figure out what will work for them so they can thrive in retirement. Traditional full-stop retirement isn’t everyone’s goal, and many people don’t want to slow down and take it easy. They want to stay engaged, grow and experience new things. The tide is changing, and more and more people are waking up to the fact that they don’t want a retirement based on all leisure and no work. Many people, including those with a lot of money, are choosing not to retire because it would bore them. Because of increasing longevity, the era of traditional full-stop retirement to a life of leisure is over; most of us can’t afford it for the next twenty- or thirty-plus years and, more importantly, that traditional retirement lifestyle will not sustain our mental and emotional well-being over such an extended period. Your first life was a quest for success and money; your second life is a quest for meaning and significance. If you approach it right, you can recreate the excitement and possibility you felt back in your twenties when you first started out. Remember how that felt? Don’t let retirement limit you. Mike Drak worked in the financial services industry for 38 years. Now he leads workshops and speaks at events to help others plan for a retirement full of opportunities. You can read more of his

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