Despite of impressive pace of US economy growth, expressed in GDP increase, real housing prices growth came to cyclical downturn, Bloomberg reports. According to experts, situation will get worse, as there are some factors that predicted market decline in 2006.

Home prices are very cyclical, and as it appeared during last crisis, its movement can have significant influence on the economy as whole.

Data this week shall predict reduction in new building and sales of existing objects.

One of the reasons for worsening forecast is falling affordability of housing, which is a function of ability of family with median income to buy home for average price. It shall be noted that so-called Housing Affordability Index from National Realtors’ Association fell to the lowest level in ten years as a result of rising mortgage rates. However, in addition to that the ratio of average price to average wage grew as well. It recently reached the highest level in ten years.

As a result, there is a demand for houses, but prices are too high, which causes slowdown in sales.

Price decline is not very good news for homebuilders. In addition to that input costs are increasing. Rising steel tariffs and tight labor market play an important role in such increase. This is why it is not a surprise that stocks of homebuilders lost more than fourth of their value since January.

In current situation there is almost no hope for price growth, while situation as a whole is worth to be closely monitored, Bloomberg experts say.