Apr 29, 2015 | Market Outlook
According to the Case-Shiller 20-City Home Price Index for February, month-to-month home prices increased by 0.50 percent from January’s reading and achieved the highest year-over-year gain in six months. Analysts expected February home prices to increase by 4.80 percent. David Blitzer, chairman of the S&P Dow Jones index committee, said that home prices continue to rise and outpace both inflation and wage gains. Although this is great news for homeowners, it also demonstrates the challenge of affordability for home buyers.
Year-Over-Year Home Prices: Denver Leads in Home Price Gains
Home prices in Denver, Colorado increased by 10 percent year-over-year in February; San Francisco, California home prices gained 9.80 percent year-over-year. Miami, Florida home prices gained 9.20 percent year-over-year. Dallas, Texas and Portland, Oregon rounded out the top five cities with the highest year-over-year home price appreciation in February. Home prices in Dallas increased by 8.60 percent, while and Portland’s home prices gained 7.10 percent year-over-year.
February readings for year-over-year home price growth were lowest in Washington, DC at 1.40 percent. Cleveland, Ohio and New York, New York posted year-over-year gains of 2.30 and 2.50 percent respectively. Phoenix, Arizona home prices grew by 2.90 percent and Minneapolis, Minnesota home prices gained 3.10 percent year-over-year.
Chicago, Illinois and Detroit Michigan posted year-over-year gains of 3.40 percent and 3.7- percent. Both cities have shown the smallest gains in prior months but home prices are gaining in year-over-year readings.
San Francisco Tops Month-to-Month Home Price Growth
Price gains from January to February 2015 were led by San Francisco, California with a reading of 2.00 percent. Denver, Colorado home prices gained 1.40 percent; Seattle, Washington home prices gained 0.80 percent, and were followed closely by a gain of 0.80 percent in Los Angeles, California and a tie at 0.70 percent for Portland, Oregon and San Diego, California.
Cites showing negative readings and the lowest month-to-month price gains in February were Boston, Massachusetts at -0.20 percent; Cleveland, Ohio at -0.10 percent. Chicago held steady with 0.00 percent gain and Atlanta, Georgia and Minneapolis, Minnesota posted month-to-month gains of +0.10 percent.
Home prices remained about 16 percent below their 2006 peak at the end of February.
Apr 1, 2015 | Market Outlook
According to the S&P Case-Shiller Home Price Index report for January, home prices grew by 4.50 percent year-over-year as compared to January 2014’s year-over-year price growth rate of 10.50 percent. This was the lowest rate of home price growth since 2012.
Analysts said that although slower growth in home prices could be good news for home buyers, national wage growth is not keeping pace with home price growth. The Labor Department reports that wages are growing at an annual rate of approximately two percent. Other obstacles to home buyers include strict mortgage standards and likely increases in mortgage rates during 2015.
Highest and Lowest Home Price Growth Rates in January
The S&P Case-Shiller Home Price Index reports that January’s five highest rates of year-over-year home price growth were:
Denver, Colorado – 8.40%
Miami, Florida – 8.30%
Dallas, Texas – 8.10%
San Francisco, California – 7.90%
Portland, Oregon – 7.20%
The five cities with the lowest year-over-year rates of home price growth were:
Chicago, Illinois – 2.50%
Minneapolis, Minnesota – 2.20%
New York, New York – 2.10%
Cleveland, Ohio – 1.60%
Washington, D.C. – 1.30%
No cities included in the 20 city index recorded no or negative growth rates on a year-over-year basis. David Blitzer, S&P Index Committee Chair, cited growing labor markets, current low mortgage rates, lower fuel prices and low inflation as positive influences on U.S. housing markets.
The Case Shiller 20-City Housing Index report for January was also impacted by severe weather conditions that reduced demand for homes. The 20-City Index has climbed by 29 percent since reaching March 2012 lows.
Pending Home Sales Rise
In other housing related news, pending home sales indicate that home sales are increasing as the peak spring and summer buying season gets underway. The National Association of Realtors® reported that its pending home sale index reading increased by 3.10 percent to 106.9 in February.
This was the highest reading since June 2013 and was up 12.00 percent over February 2014. Pending home sales are sales for which a contract has been signed, but the sale has not closed. Pending home sales are considered an indicator of future home sales.
Dec 1, 2014 | Market Outlook
Last week’s scheduled economic events were packed into Tuesday and Wednesday, but several housing-related reports were released including the Case-Shiller National and 10-and 20-City Home Price Indices for September, The FHFA House Price Index also for September, and New and Pending Home Sales for October.
Case-Shiller, FHFA Report Slower Growth in Home Prices
According to Case-Shiller home price indices released Tuesday, the national rate of home price growth has slowed from August’s year-over-year reading of 5.60 percent to September’s reading of 4.90 percent. This was the lowest rate of home price growth in two years and was seen by analysts as a positive development in terms of sustainable price growth.
Double-digit percentage gains in home price growth in 2013 and earlier this year drove many would-be home buyers to the sidelines as narrow inventories of homes caused bidding wars in high-demand areas. 20 cities tracked by Case-Shiller had mixed results, with home prices falling in nine cities, rising in nine cities and prices were unchanged in two cities.
FHFA, the Federal Housing Finance Agency and overseer of Fannie Mae and Freddie Mac, reported year-over-year price growth of 4.30 percent in September against August’s reading of 4.80 percent. Lower price gains for September were expected as the prime period of summer sales wound down. FHFA reports on home prices related to mortgages and properties held by Fannie Mae and Freddie Mac.
Pending and New Home Sales Show Mixed Results
The National Association of Realtors® reported that the Pending Home Sales Index dipped to 104.3 in October as compared to September’s reading of 105.1.Lawrence Yun, chief economist for the National Association of Realtors®, said that lagging wage growth and tight mortgage credit conditions were stalling demand for homes. Pending home sales usually close within two months and serve as a gauge for upcoming home sales and mortgage activity. A reading of 100 for the Pending Home Sales Index is equivalent to pending home sales performance in 2001.
Better news came from the Department of Commerce New Home Sales report for October. New home sales achieved a five month high with a reading of 458,000 new homes sold on a seasonally-adjusted annual basis. October’s reading was 0.70 percent higher than September’s reading of 455,000 new homes sold, but missed analysts’ expectations of 469,000 new homes sold. New home sales increased by 1.80 percent year-over-year with regional rates as follows:
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Midwest: +15.8 percent
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Northeast +7.1 percent
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West -2.7 percent
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South -1.9 percent
The median price of new homes rose to a record high of $305,000 in October. The supply of new homes rose to a 5.60 month supply from September’s reading of a 5.50 month supply of new homes.
Mortgage Rates Fall or Flat, Jobless Claims Rise
Freddie Mac reported that the average rate for a 30-year fixed rate mortgage fell from 3.99 percent to 3.97 percent; the average rates for 15 year mortgages and 5/1 mortgages were unchanged at 3.17 percent and 3.01 percent respectively. Average discount points were unchanged for all loan types at 0.50 percent.
New Jobless Claims rose to 313,000 last week and surpassed 300,000 for the first time in several weeks. Analysts had expected a seasonally-adjusted reading of 288,000 new jobless claims. Analysts said that a rise in claims could indicate a slower pace in hiring, but said that weekly readings are too volatile to indicate a trend. The four-week average of jobless claims was 294,000 new claims, which was near an eight-year low.
What’s Ahead
Next week’s scheduled economic events include Construction Spending, the Fed’s Beige Book Report, Non-Farm Payrolls and the National Unemployment Rate. Freddie Mac’s PMMS report on mortgage rates and Weekly Jobless claims will also be released as usual.
Mar 31, 2014 | Uncategorized
Last week’s economic news includes several reports about housing markets.
The S&P Case-Shiller 10 and 20 city housing market indices, the FHFA House Price Index, New Home Sales and Pending Home sales reports suggest that the national housing market continues to grow, but at lower rates.
Regional readings varied and suggested that winter weather was a negative influence on affected markets.
In a press conference held on March 19 Federal Reserve Chair Janet Yellen said that severe winter weather had interfered with the Fed’s ability to get a clear reading on economic developments.
The Case-Shiller 10 and 20-City Home Price Indices for January showed year-over-year growth of 13.50 and 13.20 percent respectively. The 20-City Home Price Index reported that 12 of 20 cities reported slower rates of home price appreciation.
The 10-City Index ticked upward, but was little changed. The 20-City index posted its third consecutive month-to-month decline in home prices with a reading of -0.10 percent.
Las Vegas, Nevada led cities posting gains with a month-to-month reading of +1.10 percent, but home values remain 45 percent below peak prices achieved in August 2006.
David M. Blitzer, chair of the Index Committee at S&P Dow Jones Indices, noted that home prices were up 23 percent over their lows in 2012.
FHFA Data Reflects Slower Growth in Home Prices
The FHFA House Price Index reports home price trends for sales of homes with mortgages owned or guaranteed by Fannie Mae or Freddie Mac. January’s data reported a year-over-year gain of 7.40 percent, which is approximately 8.0 percent below its peak in April 2007.
Month-to-month home prices varied within the nine U.S. Census regions and ranged from -0.30 percent to +1.30 percent.
FHFA reported that year-over-year, all nine regions reported gains in home prices that ranged from +3.20 percent in the Middle Atlantic region to 14.0 percent home price growth in the Pacific region.
New and Pending Home Sales Slow
According to the U.S. Department of Commerce, February sales of new homes matched projections at 440,000 as compared to January’s revised reading of 455,000 new homes sold, which was a year-over-year high.
New home sales improved by 37 percent in the Midwest, but fell in the Northeast, South and West. This suggests that while winter weather played a role, but that housing markets are cooling in general.
Rising mortgage rates and concerns over new lending standards likely contributed to the drop in sales.
Pending home sales slumped in February according to the National Association of REALTORS®.
February’s index reading of 93.9 as compared to January’ index reading of 94.7 represented the eighth consecutive monthly drop for pending home sales and was the lowest reading since October 2011.
Pending home sales indicate future completed sales. Lawrence Yun, the NAR’s chief economist, noted that home sales delayed by winter weather may be completed this spring.
Mortgage Rates Rise, Jobless Claims Lower Than Predicted
Freddie Mac reported that average mortgage rates rose across the board last week with the rate for a 30-year fixed rate mortgage rising eight basis points to 4.40 percent. 15-year fixed mortgage rates rose 10 basis points to 3.42 percent.
Average rates for a 5/1 adjustable rate mortgage rose from 3.02 percent to 3.08 percent.
Discount points for fixed rate mortgages were unchanged at 0.60 percent and ticked upward from 0.40 to 0.50 percent for 5/1 adjustable rate mortgages.
What’s Coming Up This Week
This week’s scheduled economic news includes Construction Spending for March, ADP payrolls for March along with Freddie Mac’s PMMS weekly report on mortgage rates and the BLS Non-Farm Payrolls report.
Mar 17, 2014 | Uncategorized
Last week’s economic reports provided rays of light as compared to the recent slump in positive economic news.
Unusually severe winter weather conditions affected housing-related indicators as home builders and home buyers stayed on the sidelines.
With spring on the horizon, last week’s economic news showed welcome signs of growth.
Job Openings Up, New Jobless Claims Fall
Employment is a major factor in the decision to buy a home; would-be home buyers received a vote of confidence last week as January’s job openings increased by one million to 40 million as compared to December’s reading of 39 million job openings.
February’s reading will likely reflect a lull in activity due to winter weather conditions in much of the U.S.
Weekly jobless claims fell from 324,000 to 315,000. The Bureau of Labor Statistics reported expectations of 330,000 new jobless claims, so the latest report was good news.
Weekly reports are more volatile than monthly statistics; analysts typically track employment trends by reviewing rolling averages of several weeks’ new jobless claims data.
Mortgage Rates, Retail Sales Rise
Freddie Mac reported that average mortgage rates rose last week. The rate for a 30-year fixed rate mortgage rose by nine basis points to 4.37 percent. 15-year fixed rate mortgages had an average rate of 3.38 percent; this was an increase of six basis points
The average rate for a 5/1 adjustable rate mortgage was 3.09 percent, up from the previous week’s reading of 3.03 percent.
Discount points dipped from 0.70 to 0.60 percent for a 30-year fixed rate mortgage, were unchanged for 15-year and 5/1 adjustable rate mortgages at 0.60 and 0.40 percent.
Retail sales increased for the first time in three months according to the Commerce Department.
February retail sales surpassed expectations of a 0.20 percent gain and came in at 0.30 percent. January figures were downwardly adjusted to -0.60 percent. Retail sales exclusive of automotive sales were also higher at 0.30 percent than expectations of 0.10 percent.
The University of Michigan Consumer Sentiment index for mark was slightly lower at 79.9 than expectations of 80.8.
This was the lowest reading in four months, and was attributed in part to higher gas prices and consumer concerns over developments in Ukraine.
What’s Coming Up
This week’s economic news includes several housing-related reports.
The NAHB Home Builder Index for March, Housing Starts and Building Permits for February, and Existing Home Sales are set for release.
On Wednesday, the Fed’s FOMC statement will be released and Fed Chair Janet Yellen will give a press conference. The Fed is expected to continue its ongoing tapering of quantitative easing.
Leading economic indicators will be released along with the Weekly Jobless Claims report and Freddie Mac’s Primary Mortgage Market Survey.
