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Housing market facing a gentler slowdown than in 2007

Posted by Editor on October 19, 2018
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Home-price growth has slowed over the last several months and that trend is expected to continue as mortgage rates creep higher. In addition, there have been year-over-year declines in existing home sales for six consecutive months.

It appears the U.S. housing market is entering a slowdown – but there’s no reason to panic because it doesn’t look anything like the 2007 collapse. The big reason? The current housing cycle peak never came close to the level of the last boom by most measures.

This cycle is much different, in part because building construction never really took off during this expansion, and instead of an oversupply, the United States has had the worst shortage of for-sale homes in at least three decades.

Observers believe that if an upcoming recession resembles either the bursting of the dot-com bubble in the early 2000s or the mild early 1990s recession, the impact on housing will still be minimal. Worst case scenario? Home prices likely will stagnate for a year or more but not fall.

Source: Wall Street Journal (10/15/18) P. A2; Kusisto, Laura

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