Ian Shepherdson
Ian Shepherdson
Ian Shepherdson is an award-winning British economist. He is the founder and Chief Economist of Pantheon Macroeconomics, an economic research firm located in Newcastle, England, with an office in White Plains, New York. In February 2015, he was named The Wall Street Journal's US economic forecaster of the year for the second time, having previously won the award in 2003...
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A serious downturn in housing activity will have to wait until there is a meaningful increase in mortgage rates, ... For that, we have to wait until payrolls take off and the Fed signals tighter policy.
dip ensure expect home housing low lower mortgage quarter rates rebound recession reflects renewed sales sector strength
The renewed strength in home sales reflects lower mortgage rates; we expect rates to dip to a 14-month low this week. The housing rebound will ensure construction sector strength in the first quarter of 2001. No recession here.
buyers homes housing remains supply unable
Supply remains tight; buyers may have been unable to find the homes they want where they want them. Housing will not fold.
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The wage story is gathering real momentum. The Fed is going to 5%, and more if housing does not collapse by mid-year.
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Doubtless these numbers will be followed by a rash of commentary to the effect that rumors of the death of the housing market are greatly exaggerated. This would be the wrong conclusion to draw. It is not possible for sales to trend down and starts to trend up.
april data due favorable four given housing level likely lowest months mortgage number previous sales shows signal since strong trend
The revisions are not as big as we feared, ... The new April number shows sales at their lowest level since November, but the previous four months were exceptionally strong, in part due to favorable weather. Given the strong trend in mortgage applications, these data likely do not signal real housing weakness.
building current data face higher home house housing impression market mortgage proving rate reinforce resilient sales support trend
In the short-term, these data will reinforce the impression that the housing market is proving resilient in the face of higher mortgage rates, ... it will not last, because the current trend in home sales is not high enough to support this rate of house building in the medium-term.
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This hugely strong report will doubtless be cited as evidence that the housing market is not slowing. However, the extremely warm January weather surely distorted these data, just as it boosted retail sales and depressed industrial production.
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Our view is that home sales will slide through the summer, dragging housing starts down into the fall. But this is still no more than a forecast; mortgage applications are still very strong.
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Eventually, the housing slowdown will affect retail sales too, but that is probably a story for the spring of next year, at the earliest.
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The Fed will deal with (the housing-jobs mix) by hiking in January and March and hoping that the housing softening will be sufficient to get them off the hook by May, though I think that's a close call.
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One steep drop in housing starts does not make a downward trend, especially in a month which was very wet in the West and very cold in the Northeast. Still, the data are consistent with other signs of a softening housing market, most notably the drop in homebuilders' confidence. What really matters, though, is whether sales will fall fast enough to turn a softening into a collapse.
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Eventually, we do expect housing to lead the economy into a sustained slowdown, but it will take time, and patience is not the markets' most obvious virtue.
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His conclusion, in essence, is that much of the productivity explosion of recent years is permanent, but there is a risk that there is significant cyclical element too. Unfortunately, this leaves us none the wiser as to his intentions at the next (Federal Open Market Committee) meeting.