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Will Price Deflation Slam the U.S. Housing Market?

Originally published by CNBC on July 24, 2018 Read the original article.

It took a while, but the U.S. housing market eventually rebounded from the big slump that started before and persisted beyond the 2007-2009 financial crisis.

Observers have pointed to this rebound as an area of strength in the U.S. economy.

But, the April Elliott Wave Financial Forecast said “we beg to differ” and explained why:

Annualized U.S. home sales multiplied by the average U.S. home price [reveals] the rise from 2009 as a b-wave rally that failed to push above its record peak in 2005. B waves are rallies within bear markets, so expecting lending standards and other housing market fundamentals to return to what they were at the all-time high represents wishful thinking. As Elliott Wave Principle observes, “B waves are phonies.”

Now, we have this from CNBC (July 24):

Southern California home sales hit the brakes in June, falling to the lowest reading for the month in four years. Sales of both new and existing houses and condominiums dropped 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic. The report covers Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties.

Sales fell 1.1 percent compared with May, but the average change from May to June, going back to 1988, is a 6 percent gain.

The weakness was especially apparent in sales of newly built homes, which were 47 percent below the June average. Part of that is that builders are putting up fewer homes, so there is simply less to sell. …

In the past, California, one of the largest housing markets in the nation, has been a predictor for the rest of the country.

Now is the time to access the free report, “What You Need to Know NOW About Protecting Yourself from Deflation.”

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