Tracking the Housing Market

Eakinomics: Tracking the Housing Market AAF’s Director of Financial Services Policy Thomas Wade has posted the most recent version of his housing chart book, providing data through the 3rd quarter on mortgage rates and originations, housing permits and starts, construction, vacancies, and prices. I expect that some readers will react by thinking, “Just what I need, another 40 odd pages of economic bad news.”  Not so fast! Housing is one of the brighter spots in the economic landscape. Look first at contributions to economic growth. After acting as a drag on growth through the 2nd quarter of 2019, residential construction has been a source of economic buoyancy – with the sole exception of the 2nd quarter of 2020 when the coronavirus sent everything south in a big way. In the 3rd quarter, for example, residential construction added 2.2 percentage points to top-line growth in gross domestic product. Given the concerns over the near-term outlook for macroeconomic growth in the face of a surge in COVID-19 cases, the continued pace of growth in housing markets is a key consideration. Housing also figures into a second major policy issue in the United States: wealth inequality. Housing wealth has traditionally been a core part of the portfolios of the middle class. The continued rapid rise in housing prices ensures that 2020 will likely not be a repeat of the wealth destruction of the Great Recession and may serve to narrow some of the existing inequality between the wealth of the most affluent and the middle class. Enjoy the charts.