The Buy vs. Rent Conundrum

With interest rates rising and speculative demand cooling, the report says that the housing boom is under pressure, but prices will continue to climb as long as the economy keeps creating jobs and builders trim production to match slowing demand.

This means that as long as the economy is steady and oversupply is kept in check, there is still a good chance that your home will increase in value. While these seem like shaky suppositions, they are mitigated by the most important result of the study, which is that population factors will keep a floor under housing demand.

The center says the U.S. will add 1.37 million new households this year alone. The population is speeding toward 300 million by the end of the year from its current level just shy of 296 million, thanks in large part to a steady stream of immigration. The Census Bureaus says that about 40% of population growth comes from immigration, which has offset flagging birth rates.

There is also some good immediate news for home buyers facing down the twin villains of higher mortgage rates and high home prices. While overvalued markets may be turning into popping bubbles, nationwide the dreaded slowdown has yet to spiral out of control.

New-home sales for May, the most recent month for which data is available, rose 4.6% from April, though they dropped 5.9% from a year earlier. The results topped expectations, and the supply of homes on the market was down from a peak reached in February.

Housing start data for May came in a bit stronger than expected, showing a moderate year-over-year decline of 3.8%.