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Case-Shiller: Home Price Growth Slows in March

Case-Shiller Home Price Growth Slows in MarchCase-Shiller Indices reported slower home price growth in March with a 3.70 percent gain year-over-year as compared to 3.90 percent home price growth for the year-over-year period in 2018. This was the slowest pace of home price growth in seven years.

The 20-City Home Price Index showed Las Vegas, Nevada as having the top year-over-year home price growth rate of 8.20 percent; Phoenix, Arizona had year-over-year home price growth of 6.10 percent. Tampa, Florida had the third highest growth rate for home prices at 5.30 percent. Analysts said that all three cities continue their recoveries from deep home price declines during the recession.

Did Home Prices Grow Too Fast?

David M. Blitzer, managing director and chairman of the S&P Dow Jones Index Committee, said that given strong economic signs in other sectors, housing should be doing better. He said that too-high home price gains may have caused slowing growth in home prices as fewer prospective buyers can afford skyrocketing home prices in many metro areas.

The 20-City Home Price Index showed New York City was the only metro area posting a negative growth rate in March; this was attributed to the region’s already high home prices. Fluctuating mortgage rates likely sidelined some prospective home buyers, especially first-time and moderate income buyers.

The U.S. Department of Housing and Urban Development reported that home affordability reached a ten-year low in the end of 2018. Coupled with short supplies of affordable homes and builders focusing on high end housing development, shortages of affordable homes are expected to continue, particularly in high demand metro areas.

Slower home price growth indicates that the rapid rise in home prices in recent years aren’t sustainable as fewer prospective buyers can afford to buy homes or cannot qualify for purchase money mortgages. When home prices rise faster than inflation and wages, home buyers encounter more challenges in their searches for affordable homes.

 

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Case-Shiller: February Home Price Growth Rate Slowest in 6.50 Years

Case-Shiller February Home Price Growth Rate Slowest in 6.50 YearsHome price growth slowed in February according to the Case-Shiller 20-City Home Price Index. Home price growth hit its lowest rate in more than six years; this indicates that the roaring growth of home prices is settling and could provide opportunities for more would-be buyers to enter the housing market.

The 20-City Housing Market Index rose 0.20 percent in February as compared to January. Year-over year home prices grew by 3.00 percent and missed analyst expectations of a 3.20 percent growth rate. The 20-City Index reported slowing trends in home price growth and emerging trends in housing markets within metro areas tracked.

California’s Hold On Top Housing Price Growth Topples

Home price growth in Los Angeles, San Diego and San Francisco, California slowed enough to lose their hold on highest home price growth rates seen in recent years. San Francisco was the only city to lose ground in national home price growth with a reading of 1.40 percent growth.

The top three cities with highest gains in home prices were Las Vegas, Nevada with year-over year home price growth of 9.70 percent; Phoenix, Arizona home prices grew by 6.70 percent and Tampa, Florida where home prices grew by 5.40 percent year-over-year.

No double-digit home price gains were reported in the 20-City Home Price Index in February; as a comparison, home prices in Seattle, Washington had grown at a seasonally-adjusted annual rate of 12.70 percent a year ago. Rapidly rising home prices slowed in California due to lack of homes for sale coupled with affordability.

Buyers seeking affordable homes in temperate climates shifted their searches to metro areas offering more homes for sale at affordable prices. While fluctuating mortgage rates impact homebuyers depending on home loans, slower rates of home price appreciation can encourage would-be home buyers to enter the market.

Regional Home Price Growth Trends Shift

Home price growth slowed nationally; Case-Shiller’s February reading showed a year-over-year rate of 4.00 percent growth as compared to January’s reading of 4.20 percent home price growth. David M. Blitzer, chair and managing director of the S&P Indices Committee, cited slowing growth in new home sales, housing starts and residential investment as more signs of cooling housing markets. Mr. Blitzer also said that regional trends in home prices growth were shifting. While home price growth in East and West Coast and Great Lakes regions slowed, home price growth gained in inland areas.

 

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Case-Shiller Home Price Growth Slower in January

Case-Shiller Home Price Growth Slower in JanuaryHome price indices issued by S&P Case-Shiller showed further slowing in home price growth in January. The national home price index showed 4.30 percent home price growth for the three months ended in January. Analysts expected home prices to grow 4.20 percent for the same period in cities surveyed by Case-Shiller. More cities reported declines in home prices than those that posted gains in home prices.

The top cities posting year-over-year home price gains in the 20-City Home Price Index were Las Vegas, Nevada with 10.50 percent growth; Phoenix, Arizona posted a year-over-year home price gain of 7.50 percent. Three cities tied for third place with Charlotte, North Carolina, Minneapolis, Minnesota and Tampa, Florida posting year-over-year home price growth rates of 5.10 percent.

Home Price Growth Stalls Throughout U.S.

Noteworthy in January’s readings were the West Coast’s loss of dominance in home price growth rates and the retreat of double-digit yearly growth rates for home prices. Las Vegas, Nevada posted the only double-digit price gain year-over-year, but it suffered steep declines in home values during the recession. The 20-City HPI for January showed month-to-month home price growth slowed in 14 cities, was unchanged in one city and five cities posted gains in home price growth rates.

David M. Blitzer, managing director and chair of the S&P Case-Shiller Index Committee, said that the home prices had not grown so slowly since April 2015. Rapidly rising home prices sidelined many buyers who could not afford to keep up with home prices that rose faster than inflation and wages. Analysts said that housing markets were leaning in favor of home buyers as home price growth slowed. Mr. Blitzer said that it “remains to be seen if recent low mortgage rates and smaller price gains can sustain improved home sales.”

Federal Reserve policymakers recently announced that the Fed would hold steady on its target federal funds rate range of 2.25 to 2.50 percent; this fueled a drop in mortgage rates. Analysts said that rates could continue to fall. Slower home price growth and lower mortgage rates are expected to encourage would-be home buyers back into the market.

If you are considering purchasing a new property, be sure to contact your trusted real estate professional to discuss the market conditions in your area.

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What’s Ahead For Mortgage Rates This Week – March 4th, 2019

What’s Ahead For Mortgage Rates This Week – March 4th, 2019Last week’s economic reports included readings from Case-Shiller Housing Price Indices and Commerce Department reports on housing starts and building permits issued.

Readings on pending home sales and consumer confidence were released along with weekly reports on mortgage rates and initial jobless claims.

Case-Shiller Home Price Growth Slows to Lowest Rate in Four Years

Home prices continued to grow in December but reached their slowest pace since November2014. Seasonally-adjusted annual home price growth reached 4.70 percent in December as compared to growth of 5.10percent year-over-year in November.

Analysts cited high home prices, and slim inventories of available homes, although demand for homes eased in some metro areas. Affordability and accessibility to mortgages sidelined low and moderate-income buyers; some buyers allegedly gave up on buying homes.

Building more homes is necessary for relieving the housing shortage; real estate pros, mortgage lenders and home buyers rely on home builders to provide enough housing for first-time buyers and existing homeowners to transition from renting to owning and for existing homeowners to move up to aspirational homes. 

Housing starts fell short of expectations in December with a seasonally-adjusted annual rate of 1.078 million starts. Analysts expected 1.28 million starts based on November’s reading of 1.214 million housing starts. Construction was affected by winter weather and higher costs for building materials.

Pending Home Sales Rise in January

Pending home sales increased in January; sales with signed purchase contracts rose 4.6- percent as compared to December’s negative year-over-year reading of -2.30 percent. The National Association of Realtors® said that all four U.S. regions reported higher readings for pending home sales. The Northeast reported 1.60 percent more pending sales, Midwest and Southern regions reported increases of 2.80 percent and 8.90 percent, and the Western region reported 0.30 percent more pending home sales.

Mortgage Rates, Hold Steady New Jobless Claims Rise

Freddie Mac reported no change in 30-year fixed mortgage rates, which averaged 4.35 percent. The average rate for 15-year fixed rate mortgages dropped one basis point to 3.77 percent; mortgage rates for 5/1 adjustable rate mortgages were unchanged at 3.84 percent. Discount points averaged 0.50 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims matched expectations of 225,000 claims filed as compared to 217,000 first-time claims filed the prior week. The University of Michigan Consumer Confidence Index rose to an index reading of 131.4 and exceeded the expected reading of 124.7.

January’s reading was 121.7. Rising consumer confidence may compel would-be home buyers to enter the housing market during peak buying season in spring and summer.

What‘s Ahead

This week’s scheduled economic reports include readings on January housing starts, construction spending, and new home sales. Weekly readings on mortgage rates and new jobless claims will be released along with labor-sector reports on public and private sector jobs and the national unemployment rate.

 

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Case-Shiller: December Home Price Growth Slowest in 4 Years

Case-Shiller: December Home Price Growth Slowest in 4 YearsCase-Shiller Home Price Indices reported the slowest rate of U.S. home price growth since November 2014. According to the 20-City Home Price Index, Home prices grew by 4.20 percent year-over-year and were 0.20 percent higher in December as compared to November. The 20-City Home Price Index fell short of analysts’ expected gain of 4.80 percent year-over-year. Case-Shiller’s National Home Price Index reported home prices increased 4.70 percent in the fourth quarter of 2018.

While home price growth is sluggish, home prices continued to rise faster than wages. This creates obstacles to affordability for many would-be home buyers. Fears about rising mortgage rates and inflation, also concerned would-be home buyers seeking affordable homes.

20-City Home Price Index: Home Price Growth Rose In Only 5 Metro Areas

Las Vegas, Nevada led in home price growth for December with a year-over-year increase of 11.40 percent. Phoenix, Arizona home prices rose 8 percent year-over-year, and Atlanta, Georgia home prices increased by 5.90 percent. Home prices in west coast cities including  San Francisco, California and Seattle, Washington grew at a slower pace than in prior years, which could indicate that high-demand metro areas are approaching peak home prices.

December home price growth surpassed November readings in five cities tracked in the 20-City Index. Three cities reported no change in month-to-month home prices growth. David M. Blitzer, Chair of the S&P Dow Jones Index Committee, acknowledged that year-over-year home prices continued to fall despite the prior assertion that housing markets were not approaching “bubble” conditions seen in the Great Recession.  

Serious Headwinds Face Prospective Home Buyers

According to data compiled by the National Association of Realtors®, 27 percent of prospective home buyers surveyed at the end of 2017 believed that they would face fewer challenges to finding and buying a home in 2018. Prospective buyers surveyed in late 2018 who planned to buy within the next year decreased from 24 percent to 13 percent. Combined impacts of high home prices, potential increases in mortgage rates and strict mortgage requirements discouraged some would-be buyers, but whether this is a short or long-term trend will depend on factors including inflation, wage growth and inventories of homes for sale.

Market conditions can vary by location. Please be sure to consult with your trusted real estate professional to find out about market specifics in your area.

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Case-Shiller: Home Prices Lower in November

Case-Shiller Home Prices Lower in NovemberHome price growth continued to struggle in November, with Case-Shiller’s 20-City Home Price Index moving from October’s reading of 5.30 percent annual growth to 5.20 percent growth in November. This was the lowest reading since January 2015.

Las Vegas, Nevada remained first in home price growth rate with a year-over-year home prices growth of 12 percent. Phoenix, Arizona’s year-over-year home price growth rate was 8.10 percent and Seattle, Washington held third place with a year-over-year home price growth rate of 6.30 percent.

Las Vegas’ large year-over-year growth in home prices was attributed to the city’s ongoing recovery from the recession when home prices tanked in southern Nevada. Cities including Denver, Colorado, San Francisco California and Seattle, Washington saw steep declines in home price growth rates as compared to past peak home price growth fueled by post-recession recovery.

Challenges to home price appreciation were no surprise as slim supplies of available homes and high buyer demand created buyer competition and fewer choices of available homes. Affordability continued to discourage first-time and moderate income buyers.

David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices said, “The pace of price increases is being dampened by declining sales of existing homes and weaker affordability. Sales peaked in November 2017 and have drifted down through 2018. Affordability reflects higher prices and increased mortgage rates through much of last year.”

Affordable Homes Hard To Find Amid Slim Supply

First-time home buyers accounted for about 32 percent of home sales in November; their market share has not increased in recent months. First-time buyers typically look for pre-owned homes that cost less than brand new homes.

Healthy job growth and record unemployment rates could encourage potential buyers, but buyers were sidelined by short supplies of available homes and concerns about mortgage rates and overall economic trends. Analysts said that recently falling mortgage rates may not have been enough to encourage buyers who continued to face high demand for fewer homes and strict criteria for mortgage approval.

Positive indicators for housing markets included stable inflation and the Fed’s decision not to rise its target interest rate range; this was expected to help slow rate increases on consumer credit including mortgage loans.

If you are in the market for a new home, please be sure to consult with your trusted real estate agent and your trusted home mortgage professional.

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Case-Shiller: Home Price Growth Grinds to Lowest Rate in 2 Years

Case-Shiller: Home Price Growth Grinds to Lowest Rate in 2 YearsHome prices rose by 0.40 percent in October according to Case-Shiller’s 20-City Home Price Index and were unchanged from September’s year-over-year reading of 5.50 percent growth.

Slower growth in home prices could help some would-be home buyers enter the market, but rapidly rising mortgage rates have sidelined buyers concerned with affordability and meeting strict mortgage lending requirements.

High Mortgage Rates Stifle Demand for Homes

October’s year-over-year reading for home price growth was the lowest in two years, but home price growth continued to exceed wage increases; builders continued to face labor shortages and higher materials costs. Rising mortgage rates were a major cause of lower demand for homes as the average rate for a 30-year fixed rate mortgage increased from les than 3.50 percent at the beginning of 2017 to a high point of 4.94 percent in September.

Mortgage rates have fallen in recent weeks but remain more than one percent higher than they were two years ago. Recent volatility in financial markets and concerns over general economic conditions also contributed to a lower pace of home price growth.

Las Vegas Leads Cities with Highest Home Price Growth

The top three cities in October’s Case-Shiller 20-City index were Las Vegas, Nevada with year-over-year hone price growth of 12.80 percent; San Francisco, California’s home prices rose by 7.90 percent year-over-year and Phoenix, Arizona home prices rose by 7.70 percent year-over-year. 

October’s home price growth rates suggest that West Coast cities such as San Francisco, and Seattle, Washington may be losing their domination over double-digit home price growth rates they’ve enjoyed in recent years. Slower rates of home price growth could indicate that home prices have topped out in costly metro areas.

David M. Blitzer, managing director and chair of S&P Dow Jones Index Committee, echoed analyst’s concerns: “Rising home prices and mortgage rates mean fewer people can afford to buy a house.” The Fed’s recent decision to raise its key interest rate range for the third time in 2018 concerned some economists, but the Fed said that its Federal Open Market Committee predicts that it will raise rates only twice next year based on current and expected economic conditions in 2019.

Banks and credit-card companies typically follow the Fed’s interest rate decisions; this means that rates for consumer lending including mortgages are likely to increase in 2019.

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Newest Home Pricing Data Shows Homes Becoming More Attainable Across The Country

Newest Home Pricing Data Shows Homes Becoming More Attainable Across The CountryCase-Shiller’s 20-city home price index for September reported the lowest pace of year-over-year home price growth in almost two years. Lower home prices balanced housing markets between sellers and buyers, but home prices continued to grow approximately two times faster than wage growth.

Case-Shiller’s 20 city home price index for September posted a home price growth rate of 5.20 percent as compared to August’s year-over-year growth rate of 5.70 percent. While analysts expected slower rates of home price growth, they weren’t expecting the steep declines seen in September’s report.

David Blitzer, Chairman and CEO of the S&P Dow Jones Indices Committee, said “Home prices plus data on house sales and construction confirm the slowdown in housing.”

Las Vegas Holds on to Top Spot in Home Price Growth

Las Vegas, Nevada had the highest pace of home price growth with a year-over-year reading of 13.50 percent; San Francisco, California posted a year-over-year home price growth rate of 9.90 percent. Seattle, Washington held third place in year-over-year home price growth with a reading of 8.40 percent.

Las Vegas home prices, while leading the 20-City Home Price Index, remained 20 percent lower than their peak. Nine cities saw home prices decline in September as compared to August; Seattle, Washington posted a negative home price growth reading of -1.30 percent from August to September.

The National Association of Home Builders reported the third consecutive quarterly decline in the number of Americans expecting to buy homes within the next twelve months. As demand for homes declines, home prices are expected to fall as inventories of available homes rise.

These conditions will soften the impact of strong buyer competition and skyrocketing home prices common in recent years, but home prices remain unaffordable in many areas.

Home Buyers Deal with High Home Prices

Home buyers are finding ways to adjust their home searches to get around affordability issues. A recent survey by the National Association of Home Builders indicated 61 percent of home buyers would continue looking for a home they could afford.

40 percent of buyers said they would expand their search areas and 23 percent of responding home buyers said they would look for homes older or smaller than they originally planned to buy.

As always, contact your trusted real estate professional to discuss the latest activity in your local market.

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Case-Shiller: Home Prices Hit 11-Month Low in July

Case-Shiller Home Prices Hit 11-Month Low in JulyHome price growth slowed to its lowest pace in nearly a year according to the Case-Shiller Home Price Indices. National home price growth averaged 6.00 percent year-over-year as compared to 6.20 percent growth in June.

The 20-city home price index rose 0.10 percent in July to a seasonally adjusted rate of 5.90 percent year-over-year. Slowing home price growth was attributed to buyer fatigue and rising inventories of available homes.

Las Vegas Home Price Growth Tops 20-City Home Price Index

Las Vegas, Nevada topped the 20-City Home Price index with a year-over-year home price growth rate of 13.70 percent. Las Vegas home prices crashed during the recession but continued to recover as the economy improved.Seattle, Washington home prices rose 12.70 percent year-over-year in July; San Francisco, California held third place in the 20-city Home Price Index with year-over-year home price growth of 10.80 percent. Five cities posted higher home price growth rates than in June.

Freddie Mac Predicts Further Slowing In Home Price Growth For 2018 And 2019

Prior to the release of July’s Case-Shiller data, Freddie Mac analysts said that home buyer budget limitations coupled with more homes for sale caused home price growth to slow. Freddie Mac projected home price growth of 5.50 percent for 2018 and 4.50 percent growth in 2019.

FHFA, the agency that oversees Fannie Mae and Freddie Mac, released its home price index for July and reported lower home price growth in July. After posting steady year-over-year growth rates of 6.80 percent for April, May and June, July home price growth dipped to 6.40 percent. Data in home price data reported by FHFA includes homes connected with mortgages held or guaranteed by Fannie Mae And Freddie Mac.

While slower growth in home prices are good news for potential home buyers, rising mortgage rates, strict mortgage credit requirements and competition with cash buyers continue to create headwinds for home buyers who depend on mortgage financing to fund their home purchases.

For the greatest market advantage, be sure to contact your trusted real estate professional if you are interested in buying a new property or considering listing your current property.

 

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What’s Ahead For Mortgage Rates This Week – October 1st, 2018

What's Ahead For Mortgage Rates This Week - October 1st, 2018Last week’s economic readings included reports on home prices, new and pending home sales and remarks released by the Federal Open Market Committee of the Federal Reserve. Weekly readings on average mortgage rates and first-time jobless claims were also released.

Case-Shiller HPI: Home Price Growth Slows in July

Home prices grew slower in July according to data released last week. Home prices rose at a seasonally-adjusted annual rate of 6.0 percent in July as compared to June’s rate of 6.2 percent growth. Analysts cited increasing inventories of homes available, which typically increases competition and lowers asking prices. Would-be home buyers have also suspended their home searches due to slim supplies of homes and competition with cash buyers.

New and Pending Home Sales Show Mixed Results

Sales of new homes rose in August according to the Commerce Department. New homes sold at a seasonally adjusted annual rate of 629,000 sales. Analysts expected a reading of 625,000 sales New home sales grew by 3.50 percent from July to August and were 12.70 percent higher year-over-year. New homes sold for an average price of $320,200 in August, which was a year-over-year price increase of 1.90 percent.

Pending home sales dipped in August with a reading of – 1.80 percent in August as compared to July’s reading, which was also negative at 0.80 percent. Pending sales typically slow as fall approaches and peak hone buying season ends. Pending home sales indicate what’s ahead in closed home sales and mortgage loans. Analysts said that government readings on home sales are gleaned from small samples and are subject to adjustment.

Mortgage Rates, New Jobless Claims Rise.

Freddie Mac reported higher mortgage rates last week after the Federal Reserve announced that it would raise its target federal funds range to 2.00 to 2.25 percent. Analysts said that the Federal Open Market Committee dropped the term “accommodative” in its post-meeting announcement on Wednesday.

Interest rates for a 30-year fixed rate mortgage averaged 4.72 percent, which was an increase of seven basis points. The average rate for a 15-year fixed rate mortgage rose five basis points to 4.16 percent and the average rate for a 5/1 adjustable rate mortgage rose five basis points to 3.97 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims also rose last week with 214,000 first-time claims filed as compared to expectations of 216,000 new claims filed and the prior week’s reading of 202,000 new claims filed. High numbers of claims filed in Kentucky, North Carolina and South Carolina suggested that the jump in initial claims related to Hurricane Florence.

What‘s Ahead

This week’s scheduled economic releases include readings on public and private-sector jobs growth, the national unemployment rate and construction spending. Weekly readings on mortgage rates and new unemployment claims will also be released.