After reaching a peak last autumn the US housing market has continued to slow in an ‘orderly and moderate cooling’, is the latest assessment from US property finance giant Freddie Mac.

‘New construction eased in April to 1.85m, the least in nearly a year and a half. House and condominium sales also remain below third quarter 2005 levels, and the inventory of unsold homes has increased to near a six month supply in April, about 20 to 25 per cent above fall’s levels’, it said.

The softening buyer interest in homes also resulted in a ‘marked slowing’ in home-value appreciation, from 13.7 per cent per annum in the third quarter to 8.7 per cent during the first quarter of 2006, said Freddie Mac.

‘A decline from the records set in 2005 – records set for single family starts, home sales, and real home value growth – was inevitable. High levels of home prices and rising mortgage rates for both adjustable rate and fixed rate loans have pinched potential buyers’ budgets and reduced the overall affordability of homeownership. Indeed, during the first quarter of 2006 the homeownership rate dipped to 68.6 per cent, the lowest in about two years’.

The firm predicts ‘a steady decline in home sales over the next two years’. But it said process will continue to rise, going up by an anticipated 6.6 per cent annual rate of inflation in the second quarter, 7.8 per cent for the year as a whole, and 6.8 per cent in 2007.

Meanwhile the Harvard Joint Center for Housing Studies’ State of the Nation's Housing 2006 report said the sector was continuing to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation.

Like Freddie Mac it saw the current slowdown as ‘moderate’.
One reason is the predicted increase in the number of households. Another is increased affluence. Meanwhile affordable rental housing was becoming harder to find with a decline of about 13 per cent in cheaper rented accommodation over the 10 years to 2003.

• New Zealand house prices rose 12.4 per cent over the year to May, down from the 13.1 per cent rate for the year ended April, the firm Quotable Value has reported.

Its latest report puts the average price of a New Zealand house at just over £110,500.

‘The current market trend is showing a flattening of property values; it is the fourth consecutive month that a decrease in growth has been reported. Growth is back at the levels reported in May 2005’, said QV spokesperson Blue Hancock.

‘The most recent market activity suggests there is no longer the urgent pressure on buyers and prices are stabilising. This trend is expected to continue throughout the winter months’.

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