Reuters: U.S.-China Trade War Impact Could Extend to American Housing

In spite of market stimulus introduced by the Federal Reserve in the form of interest rate cuts, the U.S. housing market could still see the effects of that stimulus minimized due to the ongoing trade dispute between the United States and China. This is according to a new poll of property market experts conducted by Reuters.

“The current 3% average rise expected for residential property across the United States this year is the weakest since quarterly polling for calendar 2019 began in February 2017, despite a complete reversal in Fed policy and market expectations for at least two more rate cuts this year,” writes Reuters’ Hari Kishan.

U.S. property prices are still expected to outpace inflation, but recently-observed cooling trends in the housing market suggests that it will not be a pronounced contributor to the growth of the American economy, Kishan says.

U.S. home prices will rise this year by 3%, will rise in 2020 by 3.2% and by 3.3% in 2021, according to the results of the Reuters poll conducted between August 13-22. The sample consisted of approximately 40 property analysts and brokers, and are largely similar to the results from a poll on the topic conducted in May.

However, nearly 70% of respondents who answered an additional question related to their broader view of the housing market  said their outlook was leaning toward being negative.

“The problem is that overall sentiment is starting to show some signs of weakness […] so the fear is that issues outside the housing market are preventing a stronger recovery than otherwise would have been without the trade war,” said Brett Ryan, senior U.S. economist at Deutsche Bank in New York to Reuters.

Fears of an oncoming economic recession could also negatively affect the prospects for the market by lowering consumer confidence, according to Scott Anderson, chief economist at Bank of the West in San Francisco.

“Housing demand would likely be the first casualty [of recession fears],” he told Reuters.

Read the full story at Reuters.

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