Housing Market Slows Down Progressively in the United States


US housing market has seen a six years price growth period, which ends currently. Construction activity and demand are going down as the FED is increasing interest rates. Homebuilder indicator shows the lowest reading in the last three+ years.
Seasonally adjusted HPI S&P/ Case-Shiller index has seen a 5.16% yearly growth to November 2018, which was below previous 6.09% reading and the lowest growth level for the past two+ years. Those figures were supported by another US housing index (indicator, released by the Federal Housing Finance Agency), which has shown 5.76% growth in November 2018 against 6.72% growth in November 2017 and 6.37% growth in November 2016.
However, all major US cities still demonstrate growth in house prices. Las Vegas is in the top of the list with about 12.07% growth. Washington concludes this list with 2.72% growth.
As for the existing home sales, the median price hiked to US253,600 in the last month of 2018. This was 82nd consecutive price growth.
Demand is going down
The number of new houses sales has fallen to 7,7% in November 2018 (on yearly basis). As for the existing home sales, this figure declined to 10.3% for the same period.
This slowdown influences construction activity, which becomes weaker. New housing starts decreased to 3.6% in November 2018. Building permits increased by a modest 0.4% in the same period.
This situation indicates economic slowdown. NAHB Chief Economist R.Dietz has mentioned that it is important for building companies to manage their supply-side costs in order to maintain competitive prices.
As for the forecasts, they are not promising as the housing market is likely to show slow growth in the next several years. The price for existing home is expected to have only 3.1% growth.
US economic growth remains strong
US GDP increased by three percent in 2018, which is above 2.25 growth marked in 2017. It is to mention, that US economy has the fastest growth speed since 2005. This growth is widely supported by consumer spending, which is, in turn, the result of rising household wealth, lower taxes and salary growth.
However, economists expect the US economy to cool down in the next couple of years as they predict 2.3% growth in 2019, 2% growth in 2020 and 1.8% growth in 2021. US President D.Trump has signed a tax cut law, which main aim is to stimulate the US economy. However, it is not clear how this law will influence the local housing market.