Market Recap: Case-Shiller Home Price Index Up and Construction Spending and Pending Home Sales Down
This week, Hurricane Harvey devastated much of Texas’s Gulf Coast and other parts of the Southeastern United States. Mortgage rates did not shift drastically and the Federal Reserve is reconsidering further rate hikes this year, as the greater Houston area begins the process of rebuilding. Tightened housing inventory has led to an increase in home prices and a decrease in pending home sales. Construction spending decreased overall, but the residential housing segment improved.
The S&P CoreLogic Case-Shiller home price index increased marginally from May to June, up 0.1% month-over-month. Year-over-year, home values are up 5.8%. The housing industry is continuing to grapple with inventory constraints, driving home prices up and shortening the time on the market. S&P Dow Jones indexes managing director David Blitzer said in a statement, "Given current economic conditions and the tight housing market, an immediate reversal in home price trends appears unlikely.”
Pending home sales declined again in July, down 0.8% from June to July and down 1.3% year-over-year. The National Association of Realtors (NAR) cited limited inventory as a major cause of the fourth decline in five months. NAR chief economist Lawrence Yun said, “the pace of new listings is not catching up with what’s being sold at an astonishingly fast pace.”
US construction spending dropped to a nine-month low in July, down 0.6% month-over-month, but up 1.8% year-over-year. Nonresidential construction declined, including government spending and private projects. Single-family home residential construction improved by a solid 0.8%.
Home prices are continuing to trend upward, but this month’s increase was not as steep. With residential construction spending trending back upward, the industry may finally be catching up with its shortage of inventory.
Sources: Bloomberg, CNBC, MarketWatch, Mortgage News Daily, Reuters