Market Forecast: Pending Home Sales, Case-Shiller Home Price Index, and Construction Spending
Mortgage rates did not change significantly last week, and trended downward according to some sources. This week includes the end of February and the beginning of March, bringing some important monthly housing reports. The National Association of Realtors (NAR) pending home sales index and US construction spending will forecast what to expect for housing in the coming months.
The pending home sales index released by the NAR accounts for signed contracts that are not yet closed. Homes can remain under contract for four to six weeks before they are officially closed. The pending home sales index is an indicator of future housing activity, since once the sales are closed they will trigger economic momentum.
The S&P CoreLogic Case-Shiller home price index measures change in value across 20 metropolitan regions in the United States. The index excludes newly constructed homes, condominiums and co-ops and instead focuses on single-family dwellings that have been sold two or more times. Changes in the Case-Shiller home price index provide forecasts for the health of the housing market.
The construction spending reports provides a more composite barometer for all types of construction, including residential, non-residential, public, and private. Construction of any kind is an economic stimulus, as construction projects initiate spending on materials and create jobs for laborers. Construction spending can also impact interest rates and even federal fiscal policy.
Existing home sales and new home sales each posted positive numbers last week and the Federal Housing Finance Agency house price index showed value appreciation. Rates are higher than they were a year ago, but remain historically low.
Sources: Mortgage News Daily, Bloomberg, MarketWatch