It's the end of the housing recovery in the United States?

"In the last 12-18 months , virtually all U.S. housing market indicators have improved remarkably prices rise , construction recovers, mortgage delinquencies is down and credit conditions , although still restrictive , have improved " . So Mark Allan optimistic economist AXA Investment Managers , shown in the last report of the Management . "However , the pace of new construction has slowed in the last couple of months and mortgage rates have increased. In this situation , some people wonder if we are at the end of the recovery of the sector , "said the expert.

In AXA IM believe that housing starts will accelerate in the second half of the year. " The approximate indicators are recovering economic growth , access to credit for SMEs - a crucial factor in the construction sector has improved and residential - promoters show higher levels of confidence thanks to, among other things , the rise the interest of buyers , which could translate into sales growth , "says Allan .

For the expert, the best prospects, along with the rapid increase in prices , will support the increase in construction activity in 2013 and 2014. "In May , seven of the twenty cities covered by the Case- Shiller index recorded an annual growth of housing prices more than 15 %." However, Allan warns that these figures may offer a distorted view : "Nationally , average prices are still 25% below the peak of 2006 , and between 30 and 40% in states where the bubble burst " . So for AXA IM economist , " the recent inflation of housing prices respond to supply shortage and not a credit bubble ."

According to the data handled by the manager, to date much of the excess accumulated in the balance sheets of banks has gone into the hands of investors supply, but this could change soon by reducing inventories of properties from foreclosure and said rising prices. " If we expect supply to grow in the second half of the year and is expected to investor demand is weak, it is necessary to increase the demand for it" .

Threats to recovery

According to Allan , the request would be threatened by two factors: a sharp increase in mortgage interest rates and high unemployment , leading to potential buyers to doubt his ability to deal with the mortgage. "Since the sell in May, interest rates have gained about 75 basis points ," says the economist. "However , actual rates range around 2% for a 30-year mortgage at a fixed rate , so you can say that are still low by historical standards ."

" At AXA IM believe that the Federal Reserve will begin to limit its quantitative easing program in September and will continue with the gradual normalization of rates over the next two years. It is clear that this process will affect mortgage rates , but do not expect others to increase over 70 basis points by the end of 2014 , "says Allan . What if the increase was sharper ? " Most likely , in that case, the market reacts by reducing supply , but we do not expect further price declines ."

With respect to the unemployment rate , the data in recent months are encouraging. "The number of vacancies in companies increases progressively , workers return to be willing to change jobs and consumer confidence shows a slight improvement." AXA IM is optimistic : "We expect the unemployment rate to fall further in the next eighteen months so , if credit conditions do not prevent it , we can expect a similar upturn in the housing market ."