Market Recap: Case-Shiller Up, Pending Home Sales Down, GDP Expands
Mortgage rates started to trend upward this week, though there are no significant changes to report. Home prices are continuing their steady trend of appreciation and contracts signed declined slightly as limited housing inventory continues to strain housing activity. The third revision for first quarter’s Gross Domestic Product (GDP) came out Thursday, with a positive expansion.
The S&P CoreLogic Case-Shiller home price index continued to appreciate in April, but slightly less than anticipated. The 20-city index appreciated 0.3% from March to April, and is up 5.7% year-over-year. Gains were driven by Seattle, Portland, and Dallas. Limited housing inventory and steady buyer demand is continuing to push prices up as more buyers are bidding on fewer properties.
The pending home sales index is down 0.8% month-over-month and 1.7% year-over-year. Available homes for sale has dropped more than 8% since May of last year, specifically in the smaller, starter home segment, down 15.6%. National Association of Realtors chief economist Lawrence Yun said in a statement, “buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.”
For the third revision, GDP exceeded expectations, expanding at a rate of 1.4%. Consumer spending started to pick back up and US exports surged. Other influencing factors like business investment, inventories, government spending, and inflation did not change significantly.
As first-time homebuyers, like millennials, start to price into homeownership, they are facing a limited availability of starter homes. With strong demand and limited inventory, home prices will continue to appreciate.
Sources: Bloomberg, CNBC, Forbes, MarketWatch, Mortgage News Daily