In a note to clients this week, Evercore ISI analysts noted that U.S. home price expectations over the next five years just rose to a 16-year high. The firm wondered whether the Federal Reserve would take the measure into account.
They noted that the FHFA (Federal Housing Finance Agency) index increased only +0.1% month-over-month in March, but was still up +6.7% year-over-year.
Meanwhile, the Case-Shiller Index, a closely watched barometer of U.S. home prices, rose 7.4%.
“This directly increases consumer net worth and helps boost consumer confidence. Both help boost consumer spending,” Evercore ISI analysts wrote. The firm said lower mortgage rates, which have been trending lower over the past month, are helping homebuilders.
That helped explain why Evercore’s ISI survey of homebuilders has improved recently.
Despite the positivity, Evercore ISI analysts emphasized that the last time home price expectations for the next five years were this high was in 2007, “with the Great Recession just months away.”