30
Aug
By support
Home Building Tips

Case-Shiller Home Price Index: National Home Prices Reach Pre-Recession Level

According to the Case-Shiller National Home Price Index for June, Seattle, Washington continued to lead home price growth for the tenth consecutive month with a June reading of 13.40 percent growth year-over-year. Portland Oregon held second place for home price growth in the 20-City Home Price Index in June but trailed Seattle by 5.20 percent with 8.20 percent year-over-year home price growth. Dallas Texas held third place with a year-over-year home price growth rate of 7.70 percent. The 20-City Home Price Index increased by 5.70 percent year-over-year and was unchanged from May’s reading.

Case-Shiller’s National Home Price Index reported a reading of 5.80 percent home price growth in June as compared to May’s reading of 5.70 percent.

Wage Growth, Strong Economic Indicators Drive Demand for Homes

Case-Shiller’s month-to-month home price data also reflected continued growth. 14 cities reported higher home prices in June after seasonal adjustment. Home prices rose 0.40 percent month-to-month nationally; the 20-city index rose by 0.10 percent month-over-month after seasonal adjustment.

Shortages of homes for sale continue to drive up home prices as sales of pre-owned homes outpace new home sales. Builders haven’t kept up with demand due to ongoing labor and lot shortages and rising materials costs. There was an estimated 4.20 months’ supply of homes for sale in June; the average level is a six-month supply. Low mortgage rates continue to encourage first-time and current buyers to enter the market.

David M. Blitzer, Managing Director, and CEO of S&P Dow Jones Indices Committee said that although home prices are rising steadily, wage growth and overall economic growth were driving demand for homes in June. Mr. Blitzer said that current economic trends indicated home price growth was not expected to reverse anytime soon.

28
Jun
By support
Home Building Tips

Case-Shiller: Home Price Growth Slows in April

Case-Shiller’s National Home Price Index indicated slower home price growth in April. Year-over-year, home prices rose 5.50 percent in April as compared to 5.60 percent in March. Year-over-year readings are calculated on a seasonally-adjusted annual basis.

Case-Shiller’s 20 City Home Price Index was also lower with a seasonally-adjusted year-over-year reading of 5.70 percent gain in April as compared to the year-over-year March reading of 5.90 percent. Seattle, Washington held on to its lead for home price growth with a year-over-year reading of 12.90 percent; Portland Oregon followed with a year-over-year reading of 9.30 percent, and Dallas, Texas maintained third place in the 20-City Home Price Index with a year-over-year reading of 8.40 percent.

Month–to–Month Home Prices Rise in 19 of 20 Cities

Seattle also led in home price growth with a rate of 2.60 percent from March to April. Portland followed with home price growth of 1.60 percent, and Denver, Colorado reported month-to-month home price growth of 1.30 percent, which edged Dallas Texas out of third place in month-to-month home price growth rates.

Analysts have been watching housing markets carefully due to a prolonged shortage of homes for sale against high demand for homes in many areas. David M. Blitzer, Chair and Managing Director of the S&P Indices Committee, noted that skyrocketing growth in home prices must slow and eventually decline. During a press conference, he asked,” Will home price gains gently slow, or will they crash and take the rest of the economy with them?”

Analysts questioned how long home prices can continue to grow and remain sustainable. Affordability is a significant aspect of home price growth as first-time and moderate-income home buyers provide opportunities for present homeowners to sell and move up to larger homes. Mr. Blitzer eased fears of an imminent housing market crash and said, “For the moment, conditions appear favorable for avoiding a crash.”

Mr. Blitzer said that more housing starts and an expected increase in home buyers were positive signs for sustaining current home prices. Upcoming readings on consumer confidence and sentiment, new home sales and mortgage rates will support estimates of when and how much home prices will continue to increase.

16
Mar
By support
Home Building Tips

NAHB: Home Builder Confidence Highest in 12 Years

According to the National Association of Home Builders Housing Market Index for March, builder confidence in market conditions reached its highest level in 12 years and was six points higher than February’s index reading of 65.

Housing market index readings are based on three components. Builder confidence in current market conditions for new single family homes rose seven points to 78; builder confidence in market conditions for the next six months increased five points to an index reading of 78. Most surprising was the reading for buyer traffic in new housing developments, which eight points to 54 in March. Buyer traffic readings typically don’t exceed the benchmark reading of 50, which indicates neutral builder sentiment. Builder confidence in buyer traffic for March surpassed 50 only twice since the housing bubble era.

Housing Market Index Readings Expected to Moderate in Coming Months

Robert Dietz, Chief Economist for NAHB, said that Housing Market Index readings will probably be more moderate in coming months as builders continue to face obstacles. Builders cited rising costs for materials and ongoing shortages of labor and lots. On the upside, builders surveyed said that a less regulatory environment contributed to higher confidence readings.

While home builder confidence is higher, the connection between confidence and building more homes isn’t matched by housing starts. Builders also said that rising mortgage rates are a barrier to buying new homes. The Federal Reserve’s Federal Open Market Committee raised the target federal funds rate to 0.75 to 1.00 percent on Wednesday; federal rate hikes typically influence private lenders to raise consumer rates including mortgage rates.

In a post-meeting statement, Fed officials said that the federal funds rate remains accommodative and will continue to sustain economic growth and the Fed’s goal for a long-run inflation rate of 2.00 percent. The Fed cited its dual mandate of achieving maximum employment and price stabilization as supporting its decision to raise rates, but stated that actual decisions to raise the federal funds rate are based on close readings and information about global and domestic economic developments; future decisions could be impacted by emerging economic factors.