US Housing Market to Grow at Faster Pace Than Consumer Inflation in the Near Future

According to a recent Reuters poll, house prices in the US are likely to rise at a higher pace than that of consumer inflation till 2022. However, the pace of growth in home prices is expected to be slower than the previous forecast from three months ago.

While stock markets in the US have rallied lately on rising hopes for an interim trade deal between the US and China towards resolving the trade war, its impact on the overall economic growth and improvement in other aspects of the economy such as the housing market could take longer. The most recent S&P Case-Shiller Index revealed that house prices had grown by 2.0% YoY in July anf August, the lowest pace of growth seen since seven years.

Economists polled anticipate house prices to have risen by 3% by the end of this year. Meanwhile, house price growth is expected to slow down to 2.9% in 2020 and to 2.8% in 2021, lower than the previously estimated figures of 3.2% and 3.3% for 2020 and 2021 respectively. On the positive side, around 60% of the economists indicated that activity in the US housing market could bounce higher over the next year, possibly as a result of the recent rate cuts by the Fed.