What's going on?

There are signs of weakness in the housing market on both sides of the Atlantic, although for very different reasons.

What does this mean?

Rightmove, one of Britain�s biggest online real estate portals, says that asking prices for homes in London in June were down 1.4% versus a year ago (and down 0.4% nationwide, the weakest since 2013). The problem partly stems from a pullback in the most expensive part of the market, but there are also signs that Britain�s political uncertainty may be hurting house prices.


Meanwhile, in the US, house prices are up about 6% nationwide versus a year ago. But building momentum has slowed over the past three months: the number of new houses under construction has declined with builders citing a lack of available workers and short supply of land as problems (so far, it doesn�t seem to be due to weakness in the economy).

Why should I care?

The bigger picture: Millennials are expected to drive demand for homes in the coming years.

The millennial generation is the biggest living age demographic in the US. The oldest millennials are in their early thirties, and there is a wave of others approaching thirty (the stats are similar for the UK). Since that�s about the age that people tend to buy their first home, it likely means there will be a significant increase in demand for homes in the coming years, especially smaller, less expensive homes.


For you personally: Changes to the US Federal Reserve�s (�the Fed�) target interest rate do not directly affect mortgage rates.

The Fed has been increasing interest rates this year, and yet the standard US mortgage rate has hit a seven-month low. Why? Because mortgages are influenced primarily by long-term government bonds (typically bonds that expire in 30 years time, which is similar to the length of a mortgage), not the short-term interest rates which the Fed affects most directly. As long-term bonds have risen in price this year, their interest rates (a.k.a. yields) have declined, thus pushing down mortgage rates.