Monthly changes in June home sales showed a decline of 8.4% for new homes, a decline of 5.4% for existing homes. Though large on a monthly basis, in the big scheme of things there numbers were not meaningful. Both numbers continue to show a developed and established pattern of low-level stagnation.
Weakness in homes sales has been blamed on too-low inventories of houses for sale. The low inventories are part of the issue, but there is something a self-fulfilling cycle at play, due to low prices likely keeping some houses off the market. Also throttling down activity for both purchasers and sellers is the continued consumer liquidity and credit issues.
Inventories of homes for sale are relatively low at 6.6 months supply in June for existing home sales was up by 3.1% from May and was at its highest since December 2011. For new home sales, June inventories reflected a 4.9 months supply, up by 8.9% from May, and at the same levels seen in March and April, which last were exceeded in January 2012.
How does this effect your self directed IRA?
Its clear that home sales are not recovering and really have not improved significantly for the last 5 years. Home sales are a key driver of the economy in the form of consumer spending. Until home sales become less volatile with a significant pattern of improvement, the economy is not going to recover. This spells opportunity for holding investment property in your self directed IRA.
This also presents the case where the Fed and the government will continue to interfere in the inner workings of the economy which ultimately leads to printing. This will drive inflation and more instability. This means that you should be considering having a proper allocation of precious metals in your self directed IRA.
Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.