Market Recap: Case-Shiller Home Price Index Improves, Pending Home Sales and US Construction Drop
There was not much movement from mortgage rates this week, trending upwards according to some sources. The S&P CoreLogic Case-Shiller home price index improved, but the pending home sales index and construction spending declined. On Wednesday, the Federal Reserve released its Beige Book ahead of the Federal Open Market Committee (FOMC) Meeting later this month.
The National Association of Realtors (NAR) pending home sales index declined at a rate of 2.8% from December to January. Pending home sales is the leading predictor of the existing home sales report. Growth in the North and South was offset by declines in the West and Midwest. NAR chief economist Lawrence Yun stated, “buyers are easily outnumbering sellers in several metro areas.”
The S&P CoreLogic Case-Shiller home price index measures changes in home price value across 20 major metropolitan areas throughout the country. On a year-over-year basis, the composite index is up 5.6% and up 0.3% on a month-over-month basis. The gains were driven by price appreciation in Seattle, up 10.8%, Portland, up 10%, and Denver, up 8.9%.
US construction spending dropped 1.0% from December to January driven by declines in transportation, roads, and educational buildings. However, residential construction spending saw increases in single-family homes, up 1.1% month-over-month and 2.3% year-over-year, and multi-family homes, up 2.3% month-over-month and 9.0% year-over-year. Public construction spending may rebound depending on what fiscal and infrastructure changes are enacted by the new administration.
The Fed’s Beige Book commented on a tightened job market and widening labor shortages, and stated the economy had expanded at a modest-to-moderate pace. While some economists are upping the probability of a March rate hike, others claim the pending changes to fiscal policy may stall any movement.
Sources: CNBC, CNBC, Reuters, Bloomberg, MarketWatch, MarketWatch, Mortgage News Daily