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Housing Market: US: Difference between revisions
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== Housing Market as a Leading Indicator == | == Housing Market as a Leading Indicator == | ||
Housing accounts for a significant portion of investment spending by American households and overall economic activity. And has a significant impact on other industries, including labor, construction, raw materials, consumer durables, banking, and real estate. According to Leamer<ref>https://www.nber.org/system/files/working_papers/w13428/w13428.pdf</ref>, in six of the ten recessions since 1950, residential investment was the greatest contributor to weakness prior to the recession with an average contribution of 22% of weakness in gdp 1 year prior to the recession. And that an unusual residential investment contribution to GDP growth in one quarter predicts twice as much contribution from some other sector the next quarter. | |||
In the residential investment data displayed in Figure 12 there is one false positive in 1951-2 and another in 1966 -67. In both cases housing was weakening substantially but there was no recession. Why is that? Those two false positives occurred coincidentally with a big ramp-up in defense spending for the Korean War and the Vietnam War. Alarms of forthcoming recessions that were met by a response that prevented the recessions from occurring. | In the residential investment data displayed in Figure 12 there is one false positive in 1951-2 and another in 1966 -67. In both cases housing was weakening substantially but there was no recession. Why is that? Those two false positives occurred coincidentally with a big ramp-up in defense spending for the Korean War and the Vietnam War. Alarms of forthcoming recessions that were met by a response that prevented the recessions from occurring. | ||
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* Building permits in the US were revised higher to a seasonally adjusted annual rate of 1.55 million in February of 2023, from an initial estimate of 1.524 million. It remains the highest reading in five months<ref name=":0" /> | * Building permits in the US were revised higher to a seasonally adjusted annual rate of 1.55 million in February of 2023, from an initial estimate of 1.524 million. It remains the highest reading in five months<ref name=":0" /> | ||
* The NAHB/Wells Fargo Housing Market index in the US increased for a third month to 44 in March of 2023, a new high since September of 2022 and beating market forecasts of 40.<ref name=":1" /> | * The NAHB/Wells Fargo Housing Market index in the US increased for a third month to 44 in March of 2023, a new high since September of 2022 and beating market forecasts of 40.<ref name=":1" /> | ||
== Price Developments == | |||
=== December 2022 === | |||
* The S&P/Case-Shiller Home Price Index in the United States decreased 0.9% month-over-month in December of 2022, marking a sixth consecutive month of declines in house prices. However YoY, is still positive at 4.6%.<ref name=":2">https://tradingeconomics.com/united-states/case-shiller-home-price-index-yoy</ref> | |||
=== January 2023 === | |||
* The S&P CoreLogic Case-Shiller 20-city home price index in the US rose 2.5% year-on-year in January of 2023, the smallest increase since November of 2019, following a 4.6% rise in December<ref name=":2" /> | |||
* The S&P CoreLogic Case-Shiller 20-city home price index in the US declined 0.6% month-over-month in January of 2023, a seventh consecutive decline. <ref>https://tradingeconomics.com/united-states/case-shiller-home-price-index-mom</ref> | |||
== References == | == References == | ||