Market Recap: Case-Shiller House Price Index Increases, Pending Home Sales and Construction Spending Decline

Blog posted On June 02, 2017

Mortgage rates did not move significantly this week and are holding near year-long lows.  The Case-Shiller house price index appreciated to the highest level in over two years.  Pending home sales and construction spending each declined.

The S&P CoreLogic Case-Shiller home price index increased again in March, up 0.9% month-over-month and 5.9% from one year ago.  This is the highest level of appreciation in 33 months.  Seattle, Portland, and Dallas were the top 3 metros driving the gain.  New York posted the smallest gain with an increase of 4.1%. 

Pending home sales measure the number of homes that are under contract but are not yet closed.  It typically takes four to six weeks for a sale to close.  In April, pending home sales declined for the second month in a row, down 1.3% to a level of 109.8.  National Association of Realtors Chief Economist Lawrence Yun noted that tight housing inventory is impacting sales activity. 

In May, construction spending dropped 1.4% month-over-month but is up 6.7% year-over-year. Residential construction is down 0.7%, surprisingly, since it was the only segment to increase in March.  This is the first decline in residential spending since fall 2016.  Non-residential spending also declined, down 0.6% for private building and 2.0% in public spending.  Second quarter is typically busy for construction and housing, but these numbers suggest a slow start. 

Constrained housing inventory is impacting the spring selling season.  Homes are on the market for shorter amounts of time, prices are going up, and shoppers are choosing from a smaller selection of homes for sale.  While rates are historically low, buyers need to find a home first.

Sources: Bloomberg, CNBC, MarketWatch, Mortgage News Daily, Reuters