Activity measures will strengthen again soon

The recent housing market activity data have been weak more or less across the board, with new and existing homes sales, as well as housing starts, all declining in February. These falls were largely the result of the recent severe weather, as well as the slowdown in job growth around the turn of the year. The return to more normal weather conditions and the reacceleration in jobs growth should ensure that activity strengthens again soon. Indeed, the building permit numbers already point to a pick-up in housing starts. Nevertheless, the loosening in supply conditions relative to demand should ensure that house price gains will begin to slow in the coming months.