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US Home Prices Notch New Record, Threatening Inflation Fight
US home prices rose for six consecutive months midway through summer, data released on Tuesday showed.
The S&P CoreLogic Case-Shiller 20-city index posted a 0.9% MoM gain in July, running the streak to half a dozen, while FHFA prices rose 0.8%, double the expected monthly gain.
Tuesday's figures underscored the extent to which a still acute supply-demand mismatch is supporting prices despite what, for many young buyers, look like onerous mortgage rates.
Notably, the Case-Shiller 20-city
I think there is a 3rd component to the continuing rise of housing prices, lack of supply due to the still roaring job market. Current homeowners are able to weather the inflation/QT storm because they are still able to easily generate income to sustain home ownership. Anyone who bought or refinanced during the Covid years has extremely low borrowing costs. While unemployment remains historically low and while there are still roughly 9M unfilled open positions, the housing market will remain constrained by supply bottlenecks.
I for one still believe everything rests on the net interest payment’s epic decline. When firms are finally forced to borrow at QT rates we’ll see mass layoffs which will then force asset sales including homes from main street and then home prices will decline due to the increased borrowing costs and the fact that we’ll be in an economic recession. Of course that’ll also prompt voters to re-elect the snake oil salesman who will promise to fix it all himself.