Market Recap: Home Prices Increase, New Home Sales Surge, Pending Home Sales Decline
Mortgage rates trended upward this week. The S&P CoreLogic Case-Shiller home price index and new home sales report each posted significant gains. Pending home sales declined slightly, due to mixed regional numbers.
The Case-Shiller home price index hit the highest level since July 2014, increasing at a rate of 0.4% from January to February, and up 5.9% year-over-year. Price appreciation continued to be driven by the Pacific Northwest, with Seattle and Portland leading the 20-city index. Denver, however, was replaced by Dallas as one of the top 3 fastest-appreciating markets. David Blitzer, S&P Dow Jones Indices managing director and chairman of the Index Committee, stated, “Other housing indicators are also advancing, but not accelerating the way prices are. […] There are still relatively few existing homes listed for sale and the small 3.8-month supply is supporting the recent price increases.”
In March, new home sales exceeded expectations, surging to an eight-month high of 621,000 units, up 5.8% from February and up a substantial 15.6% since this time last year. New home sales comprise approximately 10% of total real estate transactions. Recently, the market has faced inventory constraints and homebuilders are struggling to keep up with ever-increasing demand.
The pending home sales index declined in March by 0.8%, exceeding the predicted 0.5% drop, to a reading of 111.4. Regionally, the index returned mixed results. Pending home sales improved in the Northeast and the South, but were lower in the Midwest and the West. The National Association of Realtors reports a 3.8-month supply of homes with an average of 34 days on the market.
Mortgage rates hit year-long lows earlier this month. Next week the Federal Open Market Committee is scheduled to meet on Tuesday and Wednesday. It is unlikely that rates will move in May, as analysts are upping their predictions for a June rate hike.
Sources: HousingWire, MarketWatch, MarketWatch, CNBC, Mortgage News Daily