Optimistic Assessment of Housing from Market Participants

While there are signs the housing market is slowing, existing-home sales remain robust and housing market participants, including the National Association of Realtors and the Mortgage Bankers Association, are expressing optimism.  Here’s a report from The Financial Times:

US home sales dip but prices still rising, by Sheila Jones and Richard Beales, FT:  US home sales fell in July from a record in June, but home prices continue to rise at double-digit rates, according to the National Association of Realtors. Total existing-home sales slipped 2.6 per cent in July to a seasonally adjusted annual rate of 7.16m from an upwardly revised record of 7.35m in June. Sales were 4.7 per cent higher than the 6.84m-unit pace in July 2004. David Lereah, NAR’s chief economist, said home sales remained in historic territory. “The level of existing-home sales in July was the third highest on record,” he said. “This is a big number any way you slice it, and housing is continuing to stimulate the overall economy.” … Mr Lereah noted that the strongest rates of price growth tended to move geographically. “In examining the hottest markets for home price appreciation, we see a rolling boom moving from one metro area to another over time, as well as a spillover effect into nearby areas with lower home prices,” he said.  … Al Mansell, NAR president, said the rate of price growth reflected supply and demand. “Housing inventory levels improved in July, but they’re still quite lean by historic standards,” he said. “If the supply of homes rises, it should … take some of the pressure off of prices. Even so, we expect home price appreciation to remain above normal over the next year.”

Meanwhile, the Mortgage Bankers Association said on Tuesday it believed that suggestions of a widespread housing bubble and worries about aggressive mortgage financing products could be overdone. In a detailed analysis of the US housing market, the MBA - which represents the mortgage finance industry - concluded that there were risks, including high rates of price appreciation and a “significant share“ of speculative investment in some regional markets. It also said that relatively new financing products including interest-only mortgages were accounting for an “unusually large” proportion of the market. But the association emphasised mitigating factors, including a “healthy” economy and growing household net worth. While cautioning borrowers to approach mortgage financing with “preparedness and scrutiny“, the MBA said borrowers, lenders and investors shared a common interest in avoiding mortgage defaults and other problems. “The mortgage market is fundamentally working: lenders are innovatively creating mortgage products that meet the needs of borrowers, while taking appropriate measures to manage risk,” the MBA said.

NY Times Report, Washington Post/AP Report, Bloomberg Report, CNN Money Report

My own view is a bit more cautious.