Market Forecast: New Home Sales, Case-Shiller Home Price Index, Pending Home Sales
Mortgage rates did not move much last week, holding steady after the rate hike earlier this month. This week, the new home sales report will come out on Monday, followed by the S&P CoreLogic Case-Shiller home price index, and pending home sales later in the week.
New home sales track the sales of newly constructed homes. Though this is a substantially smaller dataset than existing home sales, this report is still used to gauge construction and home buying activity. In April, new home sales declined 1.5% month-over-month to a seasonally adjusted annual rate of 662,000. The rising cost of construction materials is pushing home prices up, especially as new tariffs on imports like lumber and steel are imposed. The median new home price increased 0.4% year-over- year to $312,400.
The Case-Shiller home price index tracks changes in the value of homes involved in two or more sales transactions across twenty major metropolitan areas throughout the United States. Home price appreciation has been especially heated as limited for-sale inventory drives prices up. In March, home prices increased 0.5% month-over-month and 6.8% year-over-year. David Blitzer, a managing director at S&P Dow Jones Indices explained, “Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising.”
Pending home sales reports on changes in homes that are under contract but not yet closed. Typically, it takes four-to-six weeks for a contract to close. Pending home sales are used to predict housing trends. In April, pending home sales declined 1.3% month-over-month and 2.1% year-over-year. National Association of Realtors (NAR) chief economist Lawrence Yun said in a statement, “Feedback from Realtors, as well as the underlying sales data, reveal that the demand for buying a home is very robust. Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher.”
Sustained buyer demand is buoying the construction industry. Last week, the National Association of Home Builders (NAHB) housing market sentiment index was positive, and housing starts surged. However, some builders are starting to bear the burden of the increase in the cost of construction materials. Residential construction has yet to rebound to its pre-Recession peak. In the increasingly competitive market, transaction time is of the essence. Partnering with a mortgage professional that can ensure quick and accurate financing is one way to improve your chances of getting your offer accepted.
Sources: Bloomberg, CNBC, MarketWatch, Mortgage News Daily, Reuters, USA Today