30 Aug 2017
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Case-Shiller Home Price Index: National Home Prices Reach Pre-Recession Level

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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.

16 Aug 2017
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NAHB: Builder Sentiment Surges in August

Home Values

Home builder confidence in housing market conditions surged in August after sagging to an eight-month low in July. The National Association of Home Builders reported a July reading of 68 in August after analysts expected a one- point increase from July’s Housing Market Index reading of 64. Any reading over 50 indicates that more builders consider housing market conditions positive than those who do not.

Component readings of the Housing Market Index also improved in August. Builder confidence in current housing market condition rose four points to 74; Builder confidence in housing market conditions over the next six months rose by five points to 78. Builder confidence in buyer traffic in new home developments rose one point to an index reading of 49.

Positive Economy Fuels Builder Confidence

Builders have long cited a shortage of buildable lots and labor, along with rising costs as impacting confidence in current and future confidence in housing markets. NAHB said that labor shortages are worse in 2017 than in 2016. Builders reported labor shortages including carpenters and electricians. August readings suggest that positive economic developments are mitigating long-term builder concerns, but a recent tariff on Canadian lumber raised materials costs for some builders.  

The discrepancy between builder confidence and housing starts concerns real estate pros and housing and lending industry leaders, but without enough workers to staff their building crews, home builders face obstacles in meeting buyer demand for homes.

Stronger economic and jobs indicators are boosting builder confidence in housing market conditions. As more prospective home buyers find stable jobs, buying a home becomes possible for prospective buyers who have waited for economic conditions to improve sufficiently to invest in home ownership.

19 Jul 2017
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NAHB: Builder Confidence in Market Conditions Dips in July

Home Values

According to the National Association of Home Builders, July builder sentiment dipped to an index reading of 64 as compared to June’s revised reading of 66, the original reading was 67. Analysts expected the reading for July to increase to 68. Builders cited increasing lumber prices as a concern affecting builders’ outlook on housing market conditions for new single-family homes. Any reading over 50 for the NAHB Housing Market Index indicates that more builders than fewer are positive about housing market conditions, but July’s reading was the lowest in eight months. NAHB said that home builder confidence in market condition “remains strong.”

Three month rolling averages were mixed. The Northwestern region gained one point for an index reading of 47, the Midwest gained one point to a reading of 66 and the Southern region dropped three points to a reading of 66. The Western region had the highest level of builder confidence but lost one point for a reading of 75.

Shortages of homes for sale and buildable lots have impacted builder confidence for several months. As the number of available homes dwindles, demand and home prices have risen. Real estate pros view building more home as the only solution for easing the shortage of homes for sale Lower readings on builder confidence in market conditions could indicate slowing in the construction of new homes.

Lumber Tariff Raises  New Home Prices, Could Cost Jobs

While home builder confidence jumped in the aftermath of the election, builders said that a tariff on Canadian lumber is affecting home prices and construction jobs. In a statement released with July’s Housing Market Index readings, NAHB said that the lumber tariff tacked on an average of  $1236 to the average home price. NAHB leaders also said that as materials costs continue to rise, affordability will become an issue and that construction layoffs could potentially exceed 8000 jobs.

NAHB Chairman Granger MacDonald said about the lumber tariff, this is hurting housing affordability even as consumer interest in the new-home market remains strong” While current interest in new homes is healthy, home builders will have to manage costs to keep home prices affordable and competitive.

28 Jun 2017
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Case-Shiller: Home Price Growth Slows in April

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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.