In a note to clients this week, analysts at Evercore ISI noted that US house price expectations for the next five years have just surged to a 16-year high. The firm questioned whether the Federal Reserve would take the metric into consideration.
They noted that the FHFA (Federal Housing Finance Agency) index increased just +0.1% month over month in March but was still up +6.7% year over year.
Meanwhile, the Case-Shiller Index, a closely watched barometer of U.S. housing prices, rose +7.4%.
“This directly lifts Consumer Net Worth and helps lift consumer confidence. Both help lift consumer spending,” wrote analysts. The firm said lower mortgage rates, which have trended down over the last month, are helping homebuilders.
This has helped to explain why the Evercore ISI homebuilders survey has improved recently.
Despite the positives, analysts highlighted that the last time the house price expectations for the next five years measure was this high, ie, in 2007, “the Great Recession was just a few months away.”
