Market Recap: Pending Home Sales Increase, Home Prices are Up, Construction Spending Climbs
Markets were closed on Wednesday in observance of the New Year’s Day holiday. The pending home sales index improved in November after an October decline. The S&P CoreLogic Case-Shiller home price index appreciated more rapidly after a gradual slowdown in 2019. US construction spending increased.
The pending home sales index turned around in November, jumping 1.2% month-over-month. Year-over-year the index is up 7.4%. Regionally, the West and Midwest saw increases while the Northeast and South each declined slightly. Chief economist for the National Association of Realtors (NAR), Lawrence Yun, commented on the growth, “favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”
The Case-Shiller home price index appreciated a seasonally-adjusted 0.4% month-over-month and 2.2% year-over-year in October. Gains were driven by southeastern cities Tampa, FL and Charlotte, NC. Previously heated metro, San Francisco, actually experienced a decrease in home prices. After a national slowdown in home price appreciation in 2019, prices are expected to increase in 2020. Limited homes for sale and lower mortgage rates will likely lead to higher home prices.
US construction spending increased 0.6% month-over-month at an annual rate of $1.32 trillion, exceeding expectations in November. October’s figure was revised upward. Residential construction specifically increased 1.9%. Spending on public projects also increased, up 0.9%.
Strong buyer demand will continue into 2020 and new home construction to replace for-sale inventory is likely to pick up. If you plan to buy or build a home in 2020, get preapproved for mortgage financing first. Low mortgage rates will likely lead to a busy housing market and an early home buying season.
Sources: Econoday, MarketWatch, MarketWatch, MarketWatch, MarketWatch, Mortgage News Daily