Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Housing Market: Slow Or Steady?

The "Great Recession" was marked by widespread destruction of household wealth as home prices tumbled and mortgages were dragged underwater. Since then the housing recovery has come a long way. Backed by record housing affordability in recent years and improving labor and stock market conditions, home sales have been improving. After spiking briefly to about 4.6% in August, mortgage rates have since stabilized. This was reflected in recent data as new home sales in October rose 25% over the previous month. Alternatively, tightening inventory of homes and clearing of foreclosures from the pipeline have resulted in strengthening of home prices. The S&P/Case-Shiller home price index reported in Q3 2013 that the index gained over 11% in the past four quarters. Strengthening prices have attracted an increasing number of sellers and expectations are that the supply of homes will build up in 2014 leading to a slowdown in the growth of home prices. While that sounds like a setback to recovery and wealth restoration for households, is it really a slowdown or a sign of sustainable growth? I think that one benefit of a tapering in home price growth is that it is a check on any bubble like activity that may have begun to develop in the wake of a housing recovery fuelled by low mortgage rates. Also a relatively moderate pace of growth in housing prices indicates that underlying that is stronger construction of new homes that is helping to bolster supply. If recovery in the labor market continues, it can help regain the household formation that was delayed during the recession and keep the housing recovery on track.