Market Recap: Home Price Index Mixed, Pending Home Sales Down, No Rate Hike
Mortgage rates trended slightly downward this week, following the Federal Open Market Committee’s (FOMC) announcement to slow down on interest rate hikes this year. Federal Reserve Chair Jerome Powell asserts the decision to stop hiking rates has nothing to do with the strong US economy, rather a global economic slowdown taking place in Europe and China. The S&P CoreLogic Case-Shiller home price index showed that home price appreciation has slowed, giving some buyers a much-needed break. The pending home sales index declined.
The Case-Shiller home price index appreciated at a slower pace in November, marking the slowest annual pace of appreciation since January 2015. Month-over-month the index is up 0.3% and year-over-year the index is up 4.7%. Regionally, the month-over-month data was mixed. Half of the cities in the 20-city index actually saw month-over-month depreciation, two cities were unchanged, and eight appreciated. Only Las Vegas saw double-digit annual appreciation. As home price growth decelerates, some home buyers who were priced out last year may be able to make a purchase this year.
The pending home sales index declined in December, down 2.2% month-over-month and 9.8% year-over-year. Pending home sales are used to predict future housing market activity since it typically takes four to six weeks for a contract to close. According to National Association of Realtors chief economist Lawrence Yun, “the stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December.”
The FOMC met on Tuesday and Wednesday and voted unanimously to leave the federal benchmark interest rate unchanged. This was the first semiannual monetary policy meeting of the year and was followed by a press conference with Federal Reserve Chair Jerome Powell. From the Fed’s statement, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”
Housing activity tends to slow down toward the end of the year, as recent data has shown. However, heading into the spring buying and selling season, slowed home price appreciation and steady mortgage rates may bode well for a busy year ahead.
Sources: CNBC, CNBC, MarketWatch, MarketWatch, MarketWatch, Mortgage News Daily