Wednesday, November 29, 2006

Dallas Fed: Making Sense of the U.S. Housing Slowdown

by Bill McBride on 11/29/2006 11:15:00 PM

Dallas Fed Economic Letter: Making Sense of the U.S. Housing Slowdown (hat tip: Mark Thoma at Economist's View)

A nice overview. As Professor Thoma notes:

"The Dallas Fed analyzes the slowdown in the housing market and finds it difficult to make strong predictions about how it will play out."
The author touches on several key topics, and uses an approach similar to mine to calculate MEW. Clearly MEW will fall, but Dr. Duca is unsure of the impact on consumption:
"Given these uncertainties, predicting how much a slowing housing market will affect consumption is difficult. This warrants monitoring of home prices, MEW and underlying consumption trends."
I guess I'll keep monitoring prices, MEW and consumption trends!