Zindex Reflects Fed’s Cooling Comments

The potentially cooling U.S. housing market is the subject of intense speculation right now and, last week, Federal Reserve Chairman Ben Bernanke gave official voice to the debate by saying that it was “pretty clear” that the housing market is cooling but predicting a soft landing in light of a strong labor market and rising personal incomes. Bernanke said, “We’re seeing slowing in sales,” and “[t]here also seem to be signs that prices are not rising as quickly as they have been for the past few years.”

Former Fed Chairman Alan Greenspan also spoke about the housing market on the same day as Bernanke, noting, “Home sales are off, applications are off, everything is going in the same direction. The boom is over, and you can say that with a fairly strong degree of confidence.”

A relative cooling is pretty clear in the national Zindex numbers as well (the Zindex is the median Zestimate across all homes in the country). Throughout most of 2005, the monthly change in the national Zindex increased from about 1.5% to above 3%. Starting in the fall-winter of 2005, however, the monthly Zindex change began declining, a sign of slowing housing appreciation. Currently, at the national level, housing appreciation is essentially flat as measured by the Zindex. While flat may not be good news for many homeowners, it is, at least, stable and not showing strong, consistent signs of declining.