Market Recap: Case-Shiller Home Price Index Up, New Home Sales and Pending Home Sales Drop
Mortgage rates trended slightly upward this week, as housing and construction activity begins to normalize following the destruction of Hurricanes Harvey and Irma. Limited housing inventory continues to impact the housing market. The Case-Shiller home price index increased again, and new home sales and pending home sales each declined.
The S&P CoreLogic Case-Shiller home price index appreciated more rapidly in July, up 0.3% month-over-month and 5.8% year-over-year. Gains were driven by Seattle and Portland, and the newest addition to the top three metros, Las Vegas. Washington DC and Chicago trailed the index with the smallest gains.
The sales of newly constructed homes fell in August, down 3.4% to a seasonally adjusted annual rate of 560,000. This figure is down 1.2% year-over-year and the lowest annual rate since December 2016. Construction slowdown was amplified by this year’s destructive hurricane season. Rising costs of land and lumber combined with the Hurricanes Harvey and Irma damage is hurting home builders.
Pending home sales weakened again in August, down 2.6% month-over-month, the fifth decline in the past six months and the lowest level since January 2016. National Association of Realtors (NAR) chief economist Lawrence Yun explained, “demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home.”
Even with low mortgage rates, rising home prices will continue to pose a problem as housing inventory remains tight. Fall and winter are also typically slower seasons for home sales. Hurricane recovery may stimulate some construction and possibly create more inventory for sale.
Sources: Bloomberg, CNBC, MarketWatch, MarketWatch, Mortgage News Daily