Housing Chartbook: July 2021—Housing Should Firm Up During the Second Half of 2021


A Different Kind of Housing Boom

This past year’s surge in home prices has brought back memories of the housing boom that preceded the financial crisis. The current situation differs greatly from what occurred 15 years ago, when easy credit led to rampant speculation by home buyers and an immense oversupply of new homes. Today, the issue is strong underlying demand for housing amid a shortage of new and existing homes available for sale. Moreover, persistent shortages of building materials, developed lots and skilled workers are making it difficult for supply to catch up with demand, which has caused prices to spike even more than they did during the previous housing boom. The S&P CoreLogic Case-Shiller National Home Price Index has surged 14.6% over the past year, while new home prices have risen 18.1%. The surge in home prices has wiped away the gains in affordability brought on by lower interest rates, causing many would-be home buyers to put off buying. Sales of new and existing homes have fallen over the past four months. The pullback is also evident in consumer confidence and home builder surveys. The proportion of households that feel now is a good time to buy a home has fallen more than 50% since March to its lowest level on record, while the proportion that see it as is a good time to sell has risen to a record high. READ FULL ARTICLE>>