US Housing: Boom or Bust or Somewhere in Between?

Following the pandemic, housing demand has been robust due to steady household formation and elevated homeownership levels.

    Paul Varunok

    Paul Varunok Senior Vice President, Director of Securitized Research and Trading, Portfolio Manager,Franklin Templeton Fixed Income

    Neil Dhruv

    Neil Dhruv Vice President, Portfolio Manager,Franklin Templeton Fixed Income

    Aviraj Chatterjee, CFA

    Aviraj Chatterjee, CFA Senior Research Analyst, Franklin Templeton Fixed Income


    Last year, as pandemic-led economic impacts began to be felt, many worried the US housing market was vulnerable to a slowdown. We believed that the housing sector would prove to be resilient as the strength of household balance sheets and accommodative monetary policy would support the market through the economic downturn.

    Fast forward one year and the sector remains remarkably strong, with surging demand and limited supply driving housing price appreciation (HPA) of 13.3% year-over-year (y/y), as of March 2021.1 Past housing boom and bust cycles and the recent white-hot nature of real estate markets nationwide have some weary about the future of the sector. While headwinds exist, we believe underlying fundamentals are supportive of continued strength in the sector and positive HPA.

    This paper discusses the factors that drove the strength in the housing market and led to strong HPA over the last year and our outlook for the sector going forward.


    1. Source: S&P CoreLogic Case-Shiller US National Home Price Seasonally Adjusted Index (y/y %).



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