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Home Price Growth Continues to Cool

We continue to look for the housing industry and the consumer to support GDP growth, as the manufacturing and export sectors falter. The S&P/Case-Shiller National Home Price Index for June 2019 showed that prices gained 3.1% year-over-year, down from 3.3% in May and from an average 5.6% in 2018. Looking ahead into the balance of 2019, we expect price hikes to remain in the 3.0%-4.0% range, which is healthy for the industry (and certainly does not indicate an overheated housing market). To make this forecast, we monitor several leading industry supply and demand indicators. These include inventory levels, which are normal: currently there is a 4.2-month supply of existing homes for sale, while the average range is 3.5-5.5 months. We also track new home sales, which according to the U.S. Census Bureau are running at a 635,000 per year rate through July, down 13% month to month but up 4.3% year over year. As well, building permits surged in July to the highest level this year and borrowing costs have eased as the Federal Reserve has started to lower rates. We conclude that the bullish case for housing to support U.S. GDP growth remains intact. ...  forecast, we monitor several leading industry supply and demand indicators. These include inventory levels, which are normal: currently there is a 4.2-month supply of existing homes for sale, while the average range is 3.5-5.5 months. We also track new home sales, which according to the U.S. Census Bureau are running at a 635,000 per year rate through July, down 13% month to month but up 4.3% year over year. As well, building permits surged in July to the highest level this year and borrowing costs have eased as the Federal Reserve has started to lower rates. We conclude that the bullish case for housing to support U.S. GDP growth remains intact.   more

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