Flash Note 04/05/2016 Encouraging in

Flash Note
04/05/2016
Alex Fusté
@AlexfusteAlex
alex.fuste@andbank.com
Encouraging in-depth analysis of the US
housing sector in just 5 points. Sufficiently
suggestive for the Fed?
Encouraging in-depth analysis of the US housing sector in just 5
points. Sufficiently suggestive for the Fed?
1. Homebuilding in the US keeps as one of the strongest and
most reliable areas of growth in the US economy. According
to last week’s data release, residential fixed investment grew
at a boomtown pace of 14.8%.
2. Homebuilding tends to lead the overall economy by three to
six months, thus this apparently bodes well for GDP growth
over the next couple of quarters.
3. Will homebuilding continue to make a positive contribution
to GDP growth over the coming quarters? This is what our
sources answer us “There are still sound reasons to be
positive on both construction and property prices”:
a) The existing supply of homes is limited. Vacancy rates
have long ago fallen from the highs seen in 2009 and are
now low by historical standards.
b) Rental vacancies are at levels not seen since the 1990s,
while the number of vacant homes for sale has reverted
to its pre-boom and bust trend.
c) With rising rents and steady house price appreciation, US
homeowners are in no hurry to off-load their property
holdings.
d) Homes for sale in the secondary market have fallen from
a peak of 12.4 months of sales in July 2010 to 4.6 months
in March 2016.
Este documento ha sido realizado por Andbank, principalmente para su distribución interna e inversores profesionales. Este
documento no debe ser considerado como consejo de inversión ni una recomendación de compra de ningún activo, producto
o estrategia. Las referencias a cualquier emisor o título, no pretenden ser ninguna recomendación de compra o venta de
dichos títulos.
4. On the other hand, this development begs the question of
whether the demand will remain solid? In that regard, and
considering the assessment of our US-focused sources
saying that “the US jobs market is strong, with labor market
tightness adding gradually to wage pressure…” the answer
could be a simple, but clarifying, yes.
5. In sum, with such assessment of supply and demand
factors, supporting the formation of new households
and increases of purchasing power of potential
homeowners, together with mortgage rates being
close to their lowest levels, we can conclude that
housing affordability seems to be reasonable despite
recent price appreciation.
It seems thus that the outlook for the US housing remains
broadly positive. Will the Fed take this into consideration? I
certainly, do not know.
Kind regards
Alex Fusté
Chief Economist
Andbank
Este documento ha sido realizado por Andbank, principalmente para su distribución interna e inversores profesionales. Este
documento no debe ser considerado como consejo de inversión ni una recomendación de compra de ningún activo, producto
o estrategia. Las referencias a cualquier emisor o título, no pretenden ser ninguna recomendación de compra o venta de
dichos títulos.