Housing Market Is Recovering

 The Mortgage Corner

WASHINGTON (October 23, 2025) – Existing-home sales increased by 1.5% month-over-month in September, according to the National Association of REALTORS® Existing-Home Sales Report. The Report provides the real estate ecosystem, including agents and homebuyers and sellers, with data on the level of home sales, price, and inventory.

FREDexistinghomes

It’s about time. We are seeing a housing revival with existing home sales on a 7-month high for the first time since the 2008-09 Great Recession (wide gray band in FRED graph), as reported by the National Association of Realtors (NAR).

The housing market has been stuck in part because the Fed held off cutting interest rates until its September FOMC. The cut was just -0.25%, and two more rate cuts are expected this year.

That may start a more sustained housing recovery, as fixed mortgage rates are also beginning to decline despite rising inflation since April and Trump’s retaliatory tariffs. (Bond holders don’t like inflation because it reduces the value of bonds.)

"As anticipated, falling mortgage rates are lifting home sales," said NAR Chief Economist Dr. Lawrence Yun. "Improving housing affordability is also contributing to the increase in sales."

Affordability has improved because "Inventory is matching a five-year high, though it remains below pre-COVID levels," Yun added. "Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth."

The 30-year conforming fixed mortgage rate for best credit holders has dipped below 6% to about 5.875% for 0 pts. in closing costs, or 5.50% for a 1 pt. origination fee. The 15-year fixed rate is now 5.25% for 0 pts., and 4.875%, 1 pt. at this writing.

This year’s housing revival first showed up in a boost in new-home sales, according to the National Association of Homebuilders (NAHB). Sales of newly built single-family homes jumped 20.5% earlier in August, to a seasonally adjusted annual rate of 800,000 from an upwardly revised reading in July, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Much of the new-home sales boost was due to a construction surge to as much as 1.9 million annual units after the COVID-19 pandemic, seasonally adjusted. That and record low interest rates during the pandemic caused bloated inventories that builders are attempting to reduce. So they are offering interest rate buydowns to reduce mortgage rates. It cuts into builders’ profits but adds little to the sales price.

Housing construction has declined since then, decreasing 8.5% in August to a seasonally adjusted annual rate of 1.31 million units and construction will probably remain lower until more buyers come into the housing market as mortgage rates decline further.

What about mortgage rates? That hasn’t stopped homebuyers before. The 30-year conforming fixed rate hovered between 7.5% to 5.0% from the beginning of the housing bubble in 2000 to 2010 when homebuyers went wild with subprime loans, until the Great Recession.

The moral of this tale is that homebuyers and lenders have always found a way to finance a purchase with an almost infinite variety of mortgage choices. But the U.S. population is beginning to shrink because of the immigration restrictions. Builders and governments must find more creative solutions to affordable housing to bring more young adults into the housing market.

Challenging affordability conditions have always created headwinds for the housing sector, but that never stopped those that wanted to own a residence during the era of double-digit interest rates in the 1980s and 90s.

The average 30-year conforming fixed rate mortgage didn’t drop below 10% until the 1990s and 7.5% until 2001.

I foresee lenders finding creative ways to finance more homebuyers in the coming years as well.

Harlan Green © 2025

Follow Harlan Green on: https://twitter.com/HarlanGreen

When Will It End?

 Popular Economics Weekly

The government shutdown is a good time to look at how Donald Trump’s economy is doing in his second term, if we want any peace and prosperity at all once the real costs of the tariff war and his tax cuts become obvious.

“With yet another round of tariffs taking effect this week — this time on cabinets and other furniture, timber and lumber — the White House insists that its policies are about “fairness” and “reciprocity.” The evidence now tells a different story of higher prices for Americans, lower margins for U.S. firms, collapsing exports in flagship industries, investment paralysis and mounting risks of an economic slowdown.” Veronique de Rugy LATimes

Part of the problem is that Trump has always needed a lot of help to survive his storied temper tantrums, multiple business failures and bankruptcies. He learned how to play a successful businessman that he was not in “The Apprentice” TV show that he touted in his early book, Trump: How to Get Rich.

Huffington Post

“With his luxury buildings, award-winning golf courses, high-stakes casinos, and glamorous beauty pageants, Donald J. Trump is one of a kind in American business. Every day, he lives the American dream. Now he shows you how it’s done, in this rollicking, inspirational, and illuminating behind-the-scenes story of invaluable lessons and rich rewards,” said Amazon’s “How To Get Rich” book blurb.

His “American Dream” was never meant for the many, just the few. Many Americans are not living the dream that Trump promised because raising the tariffs to Great Depression levels in the name of “fairness and reciprocity” is raising the prices for all Americans, and slowing economic growth.

The LATimes reported a recent KPMG survey finds that “60% of businesses reported decreased overseas sales” in the first six months of Trump’s tariffs. KPMG finds that nearly half of American companies have already raised prices because of tariffs; two-thirds have passed at least part of those costs on to shoppers; and nearly 40% have paused hiring, with a third cutting jobs.

CEOs overwhelmingly expect tariffs to weigh on business for years. Goldman Sachs estimates U.S. consumers are now footing 55% of the total tariff bill, while foreign exporters bear only a sliver of the costs.

“So much for draining the swamp. All of this explains the wild uncertainty business leaders have experienced in recent months. Retailers are now bracing for 100% tariffs on Chinese goods scheduled for Nov. 1, right before the holiday rush. Some firms have scurried to ship early, but even a few days’ delay at sea could blow up their margins. With deadlines set, delayed and often re-announced with each news conference, companies can’t plan or invest,” said de Rugy.

The NYTimes cites a Moody’s Analytics report that the top 10 percent of U.S. households now account for nearly half of all domestic spending. And the Federal Reserve just reported that consumers’ revolving credit shrank (-5.5%) for the first time since 2020 during the COVID-19 pandemic.

Republicans and Donald Trump have put on quite a show to convince Americans that they are better off by cutting government jobs and benefits in the name of a better use their benefits.

But it’s turning out “How To Get Rich” is a scheme to benefit the very few whose taxes have been reduced. The shutdown will end when enough Americans realize it is being paid for with higher inflation and taxes (tariffs) for the many.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Whose Inflation Is It?

Financial FAQs

“Still, despite multiple offsetting drivers, the tariff shock is further dimming already lackluster growth prospects. We expect a slowdown in the second half of this year, with only a partial recovery in 2026, and, compared to last October’s projections, inflation is expected to be persistently higher. Even in the United States, growth is weaker and inflation higher than we projected last year—hallmarks of a negative supply shock.” IMF Global Economic Outlook 2025

FREDcpi

No one wants to admit who is responsible for the sharp rise in consumer prices since April 2. Democrats and the Biden administration had worked to bring the Consumer Price Index (CPI) portrayed in the above graph down to 2.3% from its high of 9% that occurred in 2023 from the COVID-19 pandemic.

But it began to rise again in this April at the same time that Trump announced retaliatory tariffs on the rest of the world. Republicans say the inflation was caused by Biden’s massive government spending programs that sped up the COVID-19 pandemic recovery.

Most economists maintain that the inflation spike was caused in large part because of the supply shortages during the pandemic. President Trump’s tariff war on imports from the rest of the world that he announced on April 2 exacerbated the product shortages as exporters scrambled to find cheaper supply routes to avoid the higher tariffs.

Add to this the looming worker shortage from tighter immigration policies that are shrinking the foreign-born labor supply—another negative supply shock on top of that from tariffs—that is beginning to affect labor productivity.

The International Monetary Fund (IMF) in its latest Global Economic Outlook report says both the tariffs and a looming worker shortage are “hallmarks of a negative supply shock” that will eventually slow down world economic growth.

China is now restricting the export of rare earth minerals, for which Trump has threatened to add an additional 100 percent tariff on China’s exports to US. And the government shutdown will only make things worse in closing down the statistical departments that tell us where we are and might be in six months.

“Overall, despite a steady first half, the outlook remains fragile, and risks remain tilted to the downside,” reports the IMF. “The main risk is that tariffs may increase further from renewed and unresolved trade tensions, which, coupled with supply chain disruptions, could lower global output by 0.3 percent next year. Apart from this, four simmering downside risks are especially worrying.”

What are they? U.S. financial markets are overinvested in AI with little to show for it, while AI is already causing white-collar layoffs, exacerbating the job losses incurred by the ICE roundup of undocumented immigrants.

And we have a record $39 trillion federal debt weighing on the credit markets that is competing with the private capital needed for new plants and equipment investment.

The Trump administration is vainly attempting to equate the record tariff rates, now at Great Depression levels, let us not forget, with some promised domestic industrial revival.

And Trump wants an easy money Federal Reserve to help grease its wheels. How do you think interest rates and inflation will respond to easier credit? The same way inflation and interest rates responded to Joe Biden’s New, New Deal?

We can’t borrow our way out of this debt mess with tax cuts for the wealthiest.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

 

A Different Federal Reserve

Financial FAQs

“Warsh would chart a new course that de-emphasizes the inflationary impact of factors such as supply chains and tariffs in favor of a views of inflation driven by government spending and the money supply.” Barron’s

Graph: Last Tech Age

The Federal Reserve is about to go through a regime change. Though President Trump initially appointed current Fed Chairman Jerome Powell, he hasn’t been happy with Powell’s leadership in his second presidential term because he wants easier credit conditions.

The Fed Governors had been resisting Trump’s pressure to lower interest rates until their rate cut in September, fearing the inflationary effects of Trump’s ongoing tariff wars, which have been boosting inflation.

So what does President Trump want to do? Move the goalposts, so that higher inflation is no longer the danger that the current Fed Board of Governors believe in maintaining their 2% inflation target. This is despite Trump’s promise to bring down inflation on “Day One”.

And Kevin Warsh, a bright young conservative economist who was just interviewed in Barron’s might be the next Fed President to do just that, along with other recently-appointed Fed Governors that are more Trump-friendly.

Do what? The fact that he is the husband of an Estee Lauder heiress worth $billions should tell us all we need to know. He, or someone as conservative, is being groomed as the new Fed Chair to protect great wealth.

A summary of Warsh interview in Barron’s above quote tells us how. He is following the Republican line that most inflation comes from government overspending, for which government must print money. The cure is to cut the size of government in every way rather than raise taxes to pay for it.

So they would blame President Biden and Chairman Powell for the skyrocketing inflation that happened when the Fed printed $2.9 trillion in less than three months, bought roughly $543 billion worth of debt in a week, and reduced interest rates to nearly zero, according to Powell’s Britannica bio.

It caused the Fed’s extensive intervention in the U.S. economy after the COVID-19 crisis of 2020 because consumer inflation then skyrocketed to a high of 9% so that the Fed began to raise short term rates to bring down inflation.

Republicans then made it a cause celebre even though it’s now obvious Trump never intended to bring down inflation on “Day One” or any other day.

In fact, most of the government largesse (with Republicans’ bipartisan support) was meant to be spent on the pandemic recovery and modernization of the American economy, which would take at least a decade. And it would largely pay for itself over the longer term with higher economic growth.

The result was that the American economy recovered from the pandemic faster than the rest of the world and resulted in several quarters of +3% GDP growth.

But now Trump has raised tariffs back to 1934 levels that prevailed during the Great Depression without congressional approval, per Nobel Laureate Paul Krugman, which is raising the cost of everything for ordinary Americans.

And it was a major cause of the Great Depression because it restricted the flow of goods and services from other countries that were badly needed to recover from the Great Depression, just as the COVID-19 pandemic shut down the whole world’s economy and resulted in a brief recession.

So we know what a new Federal Reserve regime will look like with Kevin Warsh, or another such conservative at its helm. Less interference in private sector business, which means combatting inflation isn’t its only priority (therefore allowing higher inflation). And a smaller government paid for with lower taxes and fewer regulations, which means slashing federal government jobs as DOGE is still doing and cutting more public services that benefit all Americans.

It is following a frighteningly similar trajectory to the economy of the 1930s, the last time tariffs were this high, that led to the Great Depression. The question will be how long Americans will tolerate the corruption and favor-seeking that goes with protecting the wealthy, before looking for another Roosevelt and a New Deal.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why Do Trump's Republicans Hate Immigrants?

 Popular Economics Weekly

“The stakes are enormous if Republicans succeed in removing most of the estimated 11 million undocumented worker (only half of which are from Mexico and the Latin countries), and cut legal immigration in half, as they have promised to do. Economic growth will plummet, since it is mainly based on growth of the working age population, as well as labor productivity, which has also fallen since 2000.” Harlan Green Huffington Post

Huffington Post

I wrote in 2017 that for most of the past half-century, adults in the U.S. Baby Boom generation – those born after World War II and before 1965 – have been the main driver of the nation’s expanding workforce. But as this large generation headed into retirement, the increase in the potential labor force would slow markedly, and immigrants will play the primary role in the future growth of the working-age population (though they will remain a minority of it).

Republicans know this. Then why have Republicans and the Trump administration opposed immigration reform when there has never been enough American-born citizens to fill the labor rolls?  America has always had a labor shortage, which is why we have always been a land of immigrants.

A hint to the answer may be in the Gestapo-like tactics of the ICE raids to deport undocumented immigrants that is supposedly because they are supplanting lower-paid jobs that could be held by American citizens. (But that has never been the case, according to various studies that show American citizens won’t take such lower-paying jobs.)

The Republican Party has come to believe that it can only maintain power by preventing minorities from voting. They have suppressed voters in red states by limiting access to polls in minority districts and getting the Supreme Court to nullify parts of the Voting Rights Act that allowed federal government oversight of voting districts to ensure they weren’t over-gerrymandered to not accurately represent the population mix.

And now it is taking a darker turn with Trump’s callup of National Guard Troops to occupy Democratic cities, and threats to call any protests signs of an insurrection. Why have Republicans become so desperate that they now want to rule by decree?

One reason is the total growth of adults in the prime working ages of 25 to 64 over the next decade will be lower than the total in any single decade since the Baby Boomers began pouring into the workforce in the 1960s. The growth rate of working-age adults will also be markedly reduced, according to a PEW Research study.

The latest immigration trends studied by Josh Bivens of the Economic Policy Institute’s (EPI), a labor think tank, echoes the PEW analysis. Future economic growth will suffer if there aren’t enough new immigrants to supplant retiring workers in our adult labor workforce.

“The fast growth of the labor force between 1948 and 2007 and the slowdown since then can be explained by three big demographic changes: the Baby Boom that saw high fertility rates from the late 1940s to the mid-1960s and then a sharply lower fertility rate since, the steady influx of women into the labor force from 1948 until roughly 2000, and population aging that has seen the share of the over-65 population rise rapidly since 2007,” said Bivens.

We know that President Trump has always been racist; calling any immigrants that aren’t from white, Caucasian countries, such as Norway, criminals and the lowest of the low, hence his appeal to White Christian Nationalists.

Withholding funds from states and institutions in the name of suppressing DEI hiring is the Trump administration’s attempt to impoverish Americans in the blue states, as they have done in the red states. Their answer to the smaller workforce is the hope that AI and robots will fill the labor market void.

It is the reason for the huge rally in AI companies that is driving today’s stock market highs, driven by the hope that AI can replace our declining population.

The EPI’s Bivens says the labor force of the U.S.-born population will likely fall each year for the next decade. So what can we do to alleviate the hardships to come because Republicans have no answer for the half of our working population that will be replaced by AI, and already live month-to-month with no excess savings?

The EPI says it can be done with a social safety net that serves all Americans, not just the wealthy. “In addition to policies that prioritize tight labor markets, policies should target the following for adults:

• reductions in opioid use
• reductions in incarceration rates
• improvements in policies that support parents and caregivers
•  substantial improvements in the pay and working conditions of jobs of the future (like caregiving jobs) to attract and retain workers

“Investments in today’s children are crucial for boosting the labor force participation of future generations, such as safety net policies that promote long-term health and educational investments. 

This isn’t a pie-in-the-sky wish list but what can be done today, as it has been done in the past when such autocracies fail, as they always do.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why Are Americans So Unhealthy?

 Financial FAQs

“Americans have just avoided another health care disaster in voting down the Senate’s ‘skinny’ Obamacare Repeal and Replace bill. Even though maintaining most of the taxes to pay for the Medicaid portion, it would have made insurance coverage prohibitively expensive for those older and sicker users with the removal of the private and employer mandate requirements that would cause younger and healthier people to leave the insurance markets.” Harlan Green Huffington Post

Graph: Last Tech Age

I wrote this in 2017 when Republicans had almost succeeded in repealing Obamacare, the Affordable Care Act (ACA) during President Trump’s first term.

And they are at it again by refusing to negotiate their continuing resolution (CR) with Democrats that has caused the latest government shutdown. The Democrats have been asking to keep the Obamacare subsidies in the CR that help to finance the Obamacare premiums for older and sicker folks. It’s 2017 all over again.

Republicans couldn’t repeal Obamacare then but they are about to succeed this time by allowing the Obamacare subsidies that keep premiums affordable for the 30 million users to lapse at the end of this year.

\Americans already have the worst health outcomes in the developed world, precisely because America is the only developed country—in fact, even of undeveloped countries—that doesn’t have universal coverage.

The result is one of the highest birth death rates, as well as diabetes, heart and other infectious disease rates—which are diseases usually associated with poorer, undeveloped countries and regions.

Why have Republicans been able to prevent a universal healthcare system that insures Americans that almost every other country in the world provides for their citizens?

I believe a major reason is because the U.S. has the highest income inequality in the developed world, as measured by the Gini Inequality Index that is accepted by economists. The U.S. is in 34th place of the 149 countries as ranked by the CIA’s World Factbook; with a Gini inequality index (41.8) like Bolivia and Djibouti. Whereas Denmark (29.3) and the European countries are at the top of equality rankings. The higher the index, the greater the gap between wealthy and poorer citizens of a country’s population.

Republicans have made more than 30 attempts to repeal President Obama signature achievement that required private health insurers to cover clients with existing illnesses for the first time.

A 2016 Commonwealth Club study listed Obamacare’s benefits. “…evidence indicates that the ACA has likely acted as an economic stimulus, in part by freeing up private and public resources for investment in jobs and production capacity. Moreover, the law’s payment and other cost-related reforms appear to have contributed to the marked slowdown in health spending growth seen in recent years.” Health care spending growth per person—both public and private—has slowed for five years.

· A number of ACA reforms, particularly related to Medicare, have likely contributed to the slowdown in health care spending growth by tightening provider payment rates and introducing incentives to reduce excess costs.

· Faster-than-expected economic growth and slower-than-expected health care spending have led to multiple downward revisions of the federal deficit and projected deficits.

· These trends have also been a boon to state and local government budgets, as job growth has improved state tax revenues while cost growth in health care programs has slowed. At the same time, expanding insurance to millions of poeople who were previously uninsured has supported local health systems and enhanced families’ ability to pay for necessities, including health care.

The benefits of Obamacare have become blindingly obvious since it was enacted in 2014, which for the first time required private health insurers to cover people with existing illnesses. So why have Republicans continued to oppose it?

Combined with RFK, Jr.’s cuts to the Department of Health and Human Services, Americans’ health outcomes will get even worse, making working Americans less productive.

Why shouldn’t affordable healthcare be a right for the poorest, as well as the wealthiest? Maybe even Republicans might begin to ask why?

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Trump's Art of the Steal

 Popular Economics Weekly

“I put lipstick on a pig,” he said. “I feel a deep sense of remorse that I contributed to presenting Trump in a way that brought him wider attention and made him more appealing than he is.” He went on, “I genuinely believe that if Trump wins and gets the nuclear codes there is an excellent possibility it will lead to the end of civilization.” Author Tony Schwartz

Huffington Post

Tony Schwartz should have named his 1987 Trump biography “The Art of the Steal.” Trump’s main talent has been his ability to steal from others.

Trump’s Republican-engineered shutdown that allowed no Democratic input is his latest theft. Refusing to negotiate the continuing resolution (CR) with Democrats caused the shutdown, which will give Trump an excuse for even more job losses, cost-cutting and closing of government services, as well as essential services for social security, Medicare and Medicaid, while downsizing Obamacare benefits by as much as 70 percent.

It’s becoming obvious that Trump and his Republican accomplices are stealing as much as they can from the American people in his second term.

Americans are paying in a big way. Higher everyday prices to begin with for groceries, energy, and even higher interest rates. The Federal Reserve has been reluctant to lower interest rates until now because of the rising inflation levels due to the rising costs from Trump’s tariffs.

His thievery has been well documented, lately in Susanne Craig and Russ Buettner’s best seller, Lucky Loser, How Donald Trump Squandered His Father’s Fortune and Created the Illusion of Success, that documents the con artist he really is.

“Donald Trump came to be imbued with a host of attributes that speak to how we confer status and admiration in modern America. Our awe of celebrity. Our tendency to conflate the trappings of wealth with expertise and ability. Our eagerness to believe people of apparent status will not lie to us. Our inability to distinguish the fruits of hard work from those of sheer luck.”.

It's a sordid tale, because he has stolen from friends and foes alike. So why have Republicans allowed the wholesale stealing, who were once the party of President Nixon that signed the U.S. Environmental Protection Agency into law?

It is only possible because of the intentional dumbing down of a political party that came to rely on conspiracy theories instead of facts, according to conservative journalist Matt Lewis in his 2016 best-seller, Too Dumb to Fail:

“Somewhere between Ronald Reagan’s “A Time for Choosing” speech in support of Barry Goldwater in 1964 and the most recent government shutdown, the conservative movement became neither conservative nor a movement. Hijacked by the divisive and the dumb, it now finds itself hostage to emotions and irrational thinking.”

Why? Because it became the party of the super wealthy that could only maintain power by hiring the “divisive and dumb”, as Trump has done, to run the Republican Party and his government.

Trump’s recommendation of bleach injections and the downplay of mask use to treat the COVID-19 pandemic were an attempt to dumb down his electorate, and many MAGA supporters died because of it.

Author Tony Schwartz attributed Trump’s inability to focus on any subject for more than a few minutes to his short attention span. But the chaos that followed disguised his real intentions; to steal from whomever he is dealing with, such as the students of his faux Trump University, the workers he never paid that built his Atlantic City casinos, multiple bankruptcies, and his own charitable foundation that he milked for his own use.

Why would one political party become so devoid of basic truths that they follow a man who says climate change is a hoax while experiencing more frequent floods, fires, tornadoes and rising sea levels with their own eyes?

How many more jobs will be lost, more natural disasters and pandemics and even recessions will occur, before the Republican Party base realizes they’ve been conned and want to become part of a democratic system again in which all are treated equally under the law and our constitution?

It’s what wannabe dictators do to stay in power, if their electorate will allow it.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen