Jim Sullivan Housing Quotations

The weight of evidence is showing housing is starting to cool. Prices have continued to rise faster than income. For a while that pattern has been offset by declining mortgage rates, but that's stopped.

In our forecast, we see consumer spending slowing a little bit in the fourth quarter to 3.1 percent from 3.8 percent for the same period last year, ... The rationale is that as the housing market slows , there'll be a cooling effect in the home wealth effect and the fluctuating energy prices will also have some drag on spending in the months ahead.

This is consistent with the continued downtrend in housing demand.

The clear message seems to be that while oil is a drag, it's not a downward driver of consumer spending, ... The labor market is generating good income in general and the housing market continues to deliver a positive wealth effect. These factors are helping to offset the impact of higher oil prices.

If housing continues to cool, some weakening will occur in the economy.