U.S. house prices to rise; analysts wary of deregulation: Reuters poll

Thu Feb 23, 2017 7:55am EST
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By Rahul Karunakar

(Reuters) - The U.S. housing market will rise steadily and contribute significantly to economic growth in the coming year, according to a majority of analysts in a Reuters poll who nearly all agreed that further stimulus was not required.

Steady turnover will drive home prices to rise at almost double the current rate of expected underlying consumer inflation and wages over the next few years, according to the survey conducted Feb 16-23.

The S&P/Case-Shiller composite index of prices in 20 metropolitan areas is forecast to rise 4.9 percent in 2017 and 4.0 percent next year, according to the poll of about 30 analysts. Those are similar to predictions made in December.

However, analysts were evenly split over the prospect of deregulation. U.S. President Donald Trump signed an executive order in early February to review major banking rules put in place after the 2008 financial crisis caused millions of people to lose their jobs and homes.

"Moving to ease back on those regulations now, when the market is already recovering and house prices are rising, would only increase the risk of another dangerous bubble forming," said Capital Economics property economist Matthew Pointon.

Nearly a decade since the start of a crash that led to the collapse of U.S. investment bank Lehman Brothers and a punishing global recession, the U.S. housing market has recovered most of its losses.

Those who said deregulation in the housing market was not a good idea cautioned of a repeat.

"Do you really want another housing crisis?" FAO Economics chief economist Robert Brusca said in response to the survey's question on deregulation. "Been there. Done that. Made that mistake."   Continued...

Workers construct a new house in Leyden Rock in Arvada, Colorado, U.S. on August 30, 2016.   REUTERS/Rick Wilking/File Photo