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