Let’s look at two statistics that came out over the past seven days and make sense of what is happening. First, last week, the Mortgage Bankers association announced that purchase mortgage applications have dropped 2% for the week of August 11th. 12 weeks of dropping out of the last 18. This morning, the Commerce Department said new home sales tumbled a shocking 9.4% (MoM). It looks like the combination of stagnant wages (in many cases decreasing wages), higher mortgage rates, and soaring prices have caught up to each other. Of course, your local real estate agent will always say that “this is the time to buy”, just like they did in 2006 and 2007. There is also a severe bubble forming in multi family buildings in most major metro areas because of the massive amounts of inventory being built. As rents will start to fall, demand for entry level homes will see downward pressure. Existing home sales report will be released tomorrow.