US Housing Outlook

Apollo Chief Economist

A US housing recovery has started, and this is a problem for the Fed because home prices have a weight of 40% in the CPI basket, and rising house prices will make inflation more sticky and make it more difficult for the Fed to get inflation down from currently 5% to the FOMC’s 2% inflation target. Our US housing outlook is available here.

US Housing Outlook: Housing recovery making inflation more sticky
Traffic of prospective homebuyers starting to improve likely driven by solid employment growth, high wage growth, and plenty of excess savings
Source: National Association of Homebuilders, Bloomberg, Apollo Chief Economist
Confidence improving for homebuyers and homebuilders
Source: University of Michigan, NAHB, Haver Analytics, Apollo Chief Economist
Home sales starting to recover
Source: Census Bureau, NAR, Haver, Apollo Chief Economist; Forecast is Bloomberg consensus
Average number of offers received per sold property is starting to recover
Source: NAR, Apollo Chief Economist
Housing affordability at 2007 levels but starting to bottom because of solid job growth, robust wage growth, and excess savings in the household sector
Source: Bloomberg, Apollo Chief Economist
Mortgage refi applications starting to recover
Source: Mortgage Bankers Association, Bloomberg, Apollo Chief Economist
Despite high prices, homebuyer sentiment improving
Source: University of Michigan, Apollo Chief Economist
Homebuyer sentiment about mortgage rates and credit conditions getting better
Source: University of Michigan, Apollo Chief Economist
Active listings still at very low levels, very low inventory
Source:, Apollo Chief Economist
Fewer people listing their home for sale in a down market
Source: Redfin, Haver Analytics, Apollo Chief Economist
With the housing market recovering, the anticipated strong decline in OER may never happen
Source: Zillow, BLS, Haver Analytics, Apollo Chief Economist

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