Article: https://www.housingwire.com/articles/48454-this-housing-market-clue-predicts-pending-economic-slowdown
The housing market is often used to determine the health of the economy, thus it's performance is often tracked to provide signals for the future. One such measure from the housing market is the rate of single-family authorizations. In other words, building permits requesting permission to begin construction. Recent data shows single-family authorizations have fallen 4.24% from January to February, also representing a year over year decline of 5.75%. This potentially illustrates an economic slowdown if the trend continues.
Housing maintenance and remodeling also provide an indication to economic activity - they too are down. Maintaining a fourth-month decline, maintenance volumes have fallen 5.53% year over year, while remodeling volumes have fallen 10.07%. However, potentially attributable to an increase in labor costs, spending for both measures have increased. There are also a handful of cities where maintenance and remodeling volumes have increased, defying national trends. In all, it will be important to track the housing market as certain trends may give us an indication of the overall health of economy.
5 comments:
Some cities with higher maintenance and remodeling can be explained by natural disasters. The recent floods in Houston and Hurricane Harvey caused a lot of structural damage in the south. This region would naturally defy the national housing market trend because of their geography.
Ducan, interesting article. It is weird how the housing market has become a very popular indicator for how we measure our economy. A couple weeks ago, I found an article about car loans and how many people have not been able to repay for leasing their car. Overall, this might be why many people are not successful within the housing market because they might be unable to pay for mortgage loans that might incur.
Jack, I think that the housing market has become a popular indicator for economic health largely due to its role in the 2008 recession. Earlier in the year the Fed announced their plans to hike interest rates. This would ultimately make the cost of borrowing higher, which is why it makes sense that single - family authorizations have declined as well as maintenance and remodeling volumes. It will be interesting to see if this trend will continue as the Fed has recently announced that they will no longer be raising interest rates.
Duncan, thanks for sharing this interesting piece on the housing market! Building off of previous comments, I agree that the housing market has many different factors that can affect its value. With the number of natural disasters that have occurred like the hurricanes in Florida, fires in California, as well as current flooding in the midwest, could all contribute to maintenance costs and remodeling - some of which might be too expensive for homeowners to take on. Moreover, as tastes change over time, I wonder if the housing market will still be a relevant measure for our economy. It seems like renting apartments and short term commitments are favored by our generation over a 30 year mortgage commitment.
Duncan, I like your article a lot! And I definitely agree with Jack's comment. I have always found it strange how the housing market fluctuates according to how well our market is doing and I have found it interesting as to why that would be. I talked to someone who is a real estate broker recently and he said that he's doing well right now because the economy is doing well, which I thought was insightful.
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