In contrast to 2005, the recent surge and subsequent retreat in homebuilder share prices is not a signal that the housing market is set for a damaging correction. Back then, homebuilder share prices were boosted by a rapid easing in mortgage lending standards. That led to an unsustainable boom in house prices, surging housing starts and record high homeowner vacancy rates. This time around, it is the lack of inventory which is supporting homebuilder share prices. With few signs that the housing market is overheating, it is well-placed to weather rising interest rates and an eventual economic slowdown.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services