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1.Market Observations, 8.Was Sticky

9 Oct 2018 (AFR) – Dark clouds gather over the US housing market

(9 October 2018, AFR, p32, by Rana Foroohar)

‘The US economy is white hot. Consumer confidence is higher than it has been since the 1990s. Unemployment just hit its lowest level since 1969. Using amazingly bold language for a central banker, US Federal Reserve chairman Jay Powell says he is “very happy” about the ” remarkably positive” outlook which he predicts may continue “for quite some time”. So why, amid all this good news, is the US housing market slowing? It is a hugely important question, because housing is still where the majority of Americans keep most of their wealth, and it has been a traditional bellwether for economic trends. Nationwide, sales and building permits are down. Several once soaring markets, including New York City, the San Francisco area, and Denver, have been softening. Construction activity has been slowing, too, which is a concern given the disproportionate role that home building plays in US economic growth. The problem is, ironically, the growth of the housing market itself, which has been bifurcated and has outpaced the ability of most consumers to pay for shelter.’

Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

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