I included a quote in this morning’s note on FedEx and what labor market problems are doing to their business. Here is another that gives an example of what they are dealing with:
“Our Portland Oregon hub is running with approximately 65% of the staffing needed to handle its normal volume. This staffing shortage has a pronounced impact on the operations, which results in our teams diverting 25% of the volume that would normally flow through this hub because it simply cannot be processed efficiently to meet our service standards. And in this case the volume that diverted must be rerouted and process, which drives inefficiencies in our operations and in turn higher costs. These inefficiencies included adding Incremental line haul and delivery routes, meaning more miles driven and higher use of third-party transportation to enable us to bypass Portland entirely. Now that’s merely one example.”
Existing home sales in August came in at 5.88mm as expected and vs 6mm in July which was revised up a hair. Assume that many of these closings saw contract signings in the April thru July time frame when markets were red hot. The average year to date is 6.04mm. Months’ supply remained unchanged at a still very lean 2.6 months vs the historical average of around 6%. The median home price rose by 14.9% which is the 3rd month of moderation but mostly because the comps get tougher. These are still very aggressive price rises. And thanks to that, the 1st time home buyer made up only 29% of purchases. That matches the lowest I’ve seen with January 2019 the last time we got there. It was 33% one year ago.
Bottom line, the demand to buy a home is there but just not as much at current prices. The NAR said “potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory…High home prices make for an unbalanced market.” This in turn I believe is in the process of slowing the pace of transactions and in turn prices which would be a good thing for the health of the industry because the huge price gains we’ve seen over the past year is dangerous because it never lasts and some pay more than they should.
EXISTING HOME SALES
MONTHS’ SUPPLY
MEDIAN HOME PRICE GAIN Y/O/Y
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.