Uneven US housing recovery is vulnerable to many risks

Subject

US housing outlook

Significance

US housing starts are growing at a rate of around 1.2 million private homes per year, double the pace during the worst of the global financial crisis but far below the rate of 2 million homes a year in 2004-05. House prices are still growing steadily though, passing the pre-crisis peak late last year and gaining around 5% since then.

Impacts

• San Francisco, Boston, Seattle, Dallas and Denver prices are over 20% higher than the pre-crisis peak, making them vulnerable to correction.
• New York, Washington DC, Chicago, Miami and Tampa are earlier in the cycle; prices remain at least 20% below the pre-crisis peak.
• The foreclosure rate is below 0.60% in every state but could turn around quickly if political instability or mortgage rates rise rapidly.