Industry News

Real estate prices to slow in 2006

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Wells Fargo economists expect steady economic growth next year, despite a slowdown in house-price increases, and rising oil prices and Fed rate increases. Wells Fargo senior economist Scott Anderson said, "a housing price slowdown, in part triggered by the Federal Reserve's policy actions, will become more pronounced as the year 2006 progresses, placing consumer spending, credit-quality, and job creation at some risk. The challenges are mounting for U.S. consumers, restricting their ability to spend." Anderson also said that, "real earnings are being squeezed by the spike in inflation, job growth will remain subdued and energy prices elevated, home equity borrowing and wealth creation from the housing market will dry up." Anderson said rising mortgage rates will finally begin to weigh more heavily on housing demand, while rising inventories, slowing sales, and fading builder confidence suggests that housing supply isn't as tight as it once was. The main risk for the economy next year ...