The recent broad-based weakness in US housing market data stands out from the otherwise robust economic indicators. As a sector that is highly cyclical and sensitive to rate rises, the US housing market is closely watched. It played a pivotal role in the Global Financial Crisis but is also often an indicator of "normal" recessions.
Our findings suggest the US has reduced structural vulnerabilities in the housing market. Strong household fundamentals such as robust employment and wage growth lessen the risk of a sharp correction. An important aspect of vulnerability is the starting point of household borrowing and US households have reduced levels of debt significantly since the crisis. BIS: Global economy stuck in a 'debt trap' Household debt as a percentage of GDP has fallen from a peak of 98.6% in 2008 to 77.3% in 2018. The cost of servicing mortgage debt as a percentage of disposable income has improved f...
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