For U.S. housing, trade war set to blunt some of Fed stimulus: Reuters poll

BENGALURU - The U.S.-China trade war may blunt some of the stimulus on the U.S. housing market from expected further interest rate cuts by the Federal Reserve, with only a modest outlook for price rises, a Reuters poll of property market experts found.

Property prices are still expected to outpace inflation, but the slowdown suggests there will be no meaningful contribution to growth from the housing market. “The problem is that overall sentiment is starting to show some signs of weakness...so the fear is that issues outside the housing market are preventing a stronger recovery than otherwise would have been without the trade war,” said Brett Ryan, senior U.S. economist at Deutsche Bank in New York.

“Fears of an impending recession could dent consumer confidence, and housing demand would likely be the first casualty,” said Scott Anderson, chief economist at Bank of the West in San Francisco.Minutes from the Fed’s July meeting showed policymakers were deeply divided on the quarter-point rate cut delivered then, taking the fed funds rate to 2.0-2.25%, and also did not want to give the impression that they were on a pre-set easing path.

“With concerns around the economic outlook growing, we doubt housing market activity will see much of a recovery in the second half of the year.”

The U.S. housing market could lose steam due to foreign development and changes to fiscal policy. Home prices reflects decline of construction, building permits, and home sales. Speculation and fear has created an obstacle in the U.S. economy that they might not recover.

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