US: demand for housing keeps increasing
|The US real estate market keeps on growing very significantly. One key indicator of the US economy, existing homes sales keep increasing and are now at 2007 level. Today will be released June data and should remain around May levels at all time high! The million dollar question is now to know whether the US real estate market is in a bubble and when it is going to burst. Like the US stock markets, real estate market has been largely underpinned by free money provided by the Fed over the last decade.
On top of that, house prices levels are above the 2007 level. There is no evidence at the moment that we reached an inflection point and we may see higher prices. Yet, we already heard concern about asset valuation from the Fed regarding… stocks. Nonetheless, the “surprising” recent dovish comment from Yellen paves the way for more patience. In particular, the US debt level is way too high and inflation way too low to increase rates. But markets do not seem to worry about those levels.
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We remain bullish on the EURUSD at least until September. Markets estimate that the ECB will hint at further tightening and will follow the Fed path. In our view, there is some room for more EURUSD dollar increase.
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