ING Sees Housing Market Flashing More Warning Signals

Following recent housing data, ING concludes "the housing market is looking increasingly vulnerable with a price correction possible".

• They eye rising mortgage rates in particular, suggesting the housing sector "is the most vulnerable to the rising rates environment with the growing prospect of a slowdown and potential correction in coming quarters".
• While housing starts/permits data is generally constructive, " both ... point to more housing supply hitting the market later this year at a time when demand is potentially dropping off quite quickly. Hence our belief that the rapid price appreciation of housing could quickly flatten out and possibly reverse."
• The upshot is that a housing market correction "would weaken confidence but would contribute to inflation falling more rapidly and allow the Fed to move to a more neutral position".