U.S. Outlook: How slow can the housing market go?
Much of the recently released U.S. housing market data has been on the weaker side.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on August 24.Key observations:
- After peaking at 6.7% of GDP in the third quarter of 2006, residential investment as a share of GDP declined for 14 successive quarters, reaching a nadir of 2.4% in the third quarter of 2010.
- Despite the recent weakness in the housing data, home prices continue to rise, largely due to low inventory.
- Even though existing home prices have increased year-over-year for 77 consecutive months, prices relative to income are still nowhere near the levels seen just prior to the last housing downturn.
- Our forecast calls for a continued gradual slowdown in the housing market, which is typical for the late state of an economic expansion.