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Home Price Growth Cools

We continue to look for the housing industry to support GDP growth. The S&P/Case-Shiller National Home Price Index for April showed that prices gained 3.5% year-over-year, down from an average 5.6% in 2018. Looking into the balance of 2019, we expect price hikes to remain in the 3.0%-4.0% range, which is not unhealthy for the industry -- and certainly does not indicate an overheated housing market. To make this forecast, we monitor leading industry supply and demand indicators. These include inventory levels, which are normal. Indeed, currently there is a 4.3-month supply of existing homes for sale (the average range is 3.0-5.5 months), according to the National Association of Realtors. We also track new home sales (which according to the U.S. Census Bureau are running at a 626,000 per year rate, down 4% year over year) and building permits (which have dipped 1% in the past year but still appear to be trending higher since the 2010 housing trough). Thus, we conclude that the bullish case for housing generally is intact. In addition, borrowing costs have eased as the Federal Reserve has moved to the sideline in its rate-hike campaign. As well, consumer confidence remains high, as unemployment is low. ...  levels, which are normal. Indeed, currently there is a 4.3-month supply of existing homes for sale (the average range is 3.0-5.5 months), according to the National Association of Realtors. We also track new home sales (which according to the U.S. Census Bureau are running at a 626,000 per year rate, down 4% year over year) and building permits (which have dipped 1% in the past year but still appear to be trending higher since the 2010 housing trough). Thus, we conclude that the bullish case for housing generally is intact. In addition, borrowing costs have eased as the Federal Reserve has moved to the sideline in its rate-hike campaign. As well, consumer confidence remains high, as unemployment is low.   more

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