The Federal Reserve wants to take home prices higher. But not taking any action … until next year(?)
The Case-Shiller home price index rose a record high 16.6% YoY in May. The problem with Case-Shiller is that it is the end of July.
Here is my concern that I mentioned in Benzinga. When home prices are growing at record highs (+16.61% YoY) and hourly wage growth is a paltry +2.28% YoY), were have serious affordability problems. That will eventually lead to a slowdown in home price growth.
The spread between home price growth an hourly earnings for workers is also at an all-time high.
How hot is the US housing market? All 20 metro areas in Case-Shiller’s 20 index are in double digits. Chicago is the slowest at +11.1% YoY. Phoenix AZ is the hottest at +25.9% YoY.
Here is Fed Chair Powell trying to tame home price growth at the Jackson Hole meetings.