Throughout 2016, U.S. housing prices continued to rise by about 5% year-over-year, adding to the cumulative gains made since the lows of 2011. Nationally, home prices now stand above the pre-crisis peak, as measured by the S&P CoreLogic Case-Shiller U.S. National Home Price Index. However, the recent trend toward higher interest rates has raised concerns about the outlook for home prices going into 2017, eliciting a range of responses from sheer panic to resilient optimism. The post-election interest-rate move has been swift and significant, on a scale and span that mirrors the ‘Taper Tantrum’ of 2013. In that episode, the mere telegraphing by Fed officials that the end of monetary easing was near, amid an uncertain outlook for growth, roiled financial markets across the globe. Equities suffered alongside credit as markets traded lower. As bond spreads moved out, lending conditions tightened in the mortgage market. As a result, existing home sales fell and new home sales stalled.
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