White House expects home price increases to cool

The White House Council of Economic Advisers wrote in its annual Economic Report of the President, which was sent to Congress yesterday that, "Prospects remain good for continued growth in the years ahead." While the overall economy is expected to continued growth, the CEA’s assessment of the housing market was somewhat more subdued. According to CEA member, Matthew Slaughter, the rate of home price appreciation is "likely to slow in the future."

After 5 years of 9.2 percent annual growth rate, due to low interest rates, strenghtening job market, and rising income, the next 5 years is likely to see a downward trend in part due to rising interest rates, the report said. A dramatic housing bubble burst is not expected because "the elevated level of house prices will sustain homebuilding as a profitable enterprise for some time."

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