Housing Prices Fall to 6 Year Low .. But?
Housing Prices Fall. Is That Okay?
The Federal Housing Finance Agency reported today that U.S. housing prices fell 0.5 percent in July to a six year low. Many economists are watching the housing market to analyze leading versus lagging indicators. The consumer has not returned and analysts are examining whether housing data will confirm a strong trend in either direction. June data was revised downward from a decline of 0.3 percent to a decline of 1.2 percent.
Aggregate demand for housing may have shifted in the medium term and housing prices may remain depressed for the near future as neighborhoods recalibrate pricing. Price levels may have been inflated for a decade or more and home buyers may still be hesitant to purchase new homes while expecting better prices next summer -that may or may not materialize. New tax incentives from the Spring may have disrupted pricing in the medium term and home sellers may be looking for a price ‘new normal’. Short term, price changes in housing may largely represent noisy data without fundamental information about core inflation trends. Yesterday, the Commerce Department reported that housing starts rose unexpectedly.
[...] prices are heading. In terms of main street, the economic data that helps determine whether major lagging or leading indicators will breakout to new levels will be closely analyzed. How the market reacts to new information [...]