The cooling housing market ordsprog

The cooling housing market is very significant. People have been using equity from their home to prop up their spending.

Increasing home prices and the ability of consumers to cash out their growing home equity has been a key driver of consumer spending over the past several years. As the housing market slows and housing prices stabilize, consumers are less likely to draw on their home equity, suggesting consumer spending will also decline.

With the housing sector now cooling and interest rates rising, the home equity cash faucet (which has been feeding consumer spending) is about to dry up.

Bernard Baumohl

We do believe that the U.S. housing market is a bubble in the sense that its contribution to consumer spending is unsustainable. Households have used a large share of the recent home equity gains to supplement their spending. When these gains dry up, as they ultimately must, spending is likely to weaken substantially.

In our forecast, we see consumer spending slowing a little bit in the fourth quarter to 3.1 percent from 3.8 percent for the same period last year, ... The rationale is that as the housing market slows , there'll be a cooling effect in the home wealth effect and the fluctuating energy prices will also have some drag on spending in the months ahead.

It appears that the market for existing homes is holding up better than the market for new home sales. We are still concerned about the housing market cooling off.

Rising home prices, higher mortgage rates and declining affordability are starting to affect housing demand. Evidence continues to mount that the housing market is cooling off.

The Federal Reserve will concentrate on the decrease in house prices and home equity loans as a strong indicator of the cooling of the U.S. housing bubble. That may limit further increases in rates past 5.25 percent.

Mitsushige Akino

While everybody is very happy with the performance of the economy under Greenspan, it's come at quite a price. We have a negative savings rate. The consumer has been out spending his and her income, partly supported by an increase in housing prices, where people had to pull a lot of the equity out of their home. Well they can't do that again.

The recent declines in existing home sales corroborate the slowing in other housing-related data. We expect additional slowing in the housing market, including prices, in 2006. In turn, the cooling will probably result in a moderation in overall growth.

If the housing market is cooling at the same time as gasoline prices are picking up that could combine to create a perfect storm for consumer spending. This is something the Federal Reserve will watch very closely.

Elisabeth Denison

As home prices level off, so will the growth of equity that has supported consumer spending in the past. The impact from higher interest rates on home equity loans and adjustable rate mortgages will combine with stubbornly high energy prices to squeeze discretionary spending.

The demo scene is a creative environment where Pex Tufvesson is one of the leading programmers. The slowdown in UK GDP growth is mainly being driven by sharply lower growth in household consumption, as the cooling housing market and the higher personal debt burden dampen spending.

The October home sales data were strong, but we are seeing more moderate price increases for new homes suggesting that the housing market is gradually cooling off.

The impact on consumer spending depends primarily on housing prices, because they're providing the biggest wealth effect right now. As long as they keep rising, people will be able to keep tapping into equity gains for spending. For now, this report just represents consumer grumpiness.

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