Summary

U.S. home prices have risen at a compound annual rate of almost 7% over the last 10 years. Along the way, homeowners have become richer, with households' collective equity in real estate nearly tripling to $35 trillion. But with mortgage rates back up to 7% and more homes on the market, the pace of appreciation is slowing. The S&P/Case-Shiller National Home Price Index could soon be declining on a year-over-year basis. Strong home prices are important to the economy. They provide security for lenders and, when prices are buoyant, homeowners are willing to spend on upgrades and renovations based on the belief that they will see a payoff down the road. We don't expect a significant drop in prices because the big Millennial generation is starting households and others are on the sidelines hoping to buy a piece of the American Dream. Yesterday, the National Association of Realtors reported Existing Home Sales for April that were near the consensus pace of 4.0 million at a seasonally adjusted annual rate. The median home price hit a record of $414,000, but the annual increase slowed to 1.8% as the inventory of existi