July 30, 2018

America’s housing market is raising a ‘large red flag’ for the economy

The US housing market is slowing down.

Friday’s report on US economic growth spurred a presidential victory lap, after it showed that gross domestic product (GDP) rose at a 4.1% annual rate — the fastest in nearly four years.

However, it had an ugly detail about the housing market that added to evidence of a slump: residential investment, which includes construction and brokers’ fees, shrank in Q2 for a third quarter out of four.

Add this to the worst housing affordability in nearly a decade and rising mortgage rates, and you have the recipe for a slowdown.

For Lindsey Piegza, chief economist for Stifel, the housing market “raises a large red flag” about economic growth in the second half of the year. She added that home sales help drive other parts of the economy, including consumer confidence and the pace of construction.

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