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ANZ analysts suggest that for the US economy, recession fears remain elevated amid a persistent inverted yield curve with much of the inversion resulting from a sharp decline in long-term yields and this decline is a positive for residential investment.

Key Quotes

“We expect lower mortgage rates and favourable demographics to support housing activity over the next 18 months despite a number of supply-side headwinds. We estimate that residential investment could contribute around 0.5ppts to GDP growth over the next six quarters.”

“Increased residential construction activity will have positive effects on other industries, like manufacturing and financial services. There may also be a wealth effect flowing on from higher house prices.”

“This reasonably constructive outlook for housing suggests that there remains some life in the US cycle yet.”