All 8 components of our comprehensive US Housing Market Index have posted solid and sustained gains in the last 6 months:
Our detailed PDF report for Dec 2019 has been published to the REPORTS menu.
According to many market watchers, there is no better barometer on the health of the U.S. economy than housing. It’s an industry that encompasses a myriad of vital sectors — banking, manufacturing, commodities, construction, durable goods, international trade, transportation and, of course, consumer spending. So it’s not surprising the Federal Reserve closely monitors housing trends in the course of setting monetary policy.
Sound economic growth in the U.S. is not possible without a robust residential real-estate market and in fact 7 of the last 11 declines in the housing market has led to economic recession and with 11 U.S recessions since the end of World War II, all but two were preceded by a big decline in the housing market.
Even though housing does not account for all that much of the economy, its role in recessions is huge, because it is highly cyclical and sensitive to interest rates. Housing has never accounted for more than 7 percent of total US GDP, but it has on average accounted for about a quarter of the weakness in recessions since World War II, according to a 2007 paper by Mr. Leamer titled “Housing IS the Business Cycle.”
After housing, the sector that has historically been second most important to recessions is consumer durables, or expensive purchases like cars, furniture and appliances. Those are often connected to the housing market’s prosperity because people usually buy other things when they purchase a home.