Market Recap: Case-Shiller Home Price Index Appreciates and Pending Home Sales are Up
Markets were closed on Monday, in observance of the Christmas holiday. This week, the Mortgage Bankers Association did not release the mortgage application survey, and release of the survey will resume next Wednesday. The Case-Shiller home price index continued to appreciate and pending home sales are up slightly.
The S&P CoreLogic Case-Shiller home price index climbed again in October, with the 20-city index up 6.2% year-over-year and 0.7% month-over-month. Gains were led by Seattle, Las Vegas, and San Diego, with annual growth rates of 12.7%, 10.2%, and 8.1% respectively. To date, home prices are rising nearly twice as fast as wage growth despite a job market nearing full employment and a record low unemployment rate. Managing director and chairman of the index committee at S&P Dow Jones Indices warned, “Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting.” Even with historically low mortgage rates, rising home prices mean larger down payments, and rising rents and slow wage growth make it even harder to save.
The Mortgage Bankers Association did not release a mortgage application survey this week. Last month, existing home sales reached the highest level since December 2006 and new home sales hit the highest level since July 2007. Though mortgage rates are starting to trend upward, they are still historically low and many buyers are looking to make moves before they get even higher.
Pending home sales are up 0.2% month-over-month in October, to a reading of 109.5. The market had forecast a decline, so even the slight gain is positive. The housing market is heading into 2018 with momentum. Inventory constraints have driven home prices up throughout the year and created a competitive market.
Heading into 2018, housing has strengthened. Although limited inventory is driving prices up, mortgage rates have not increased significantly. Most economists expect between two to three rate hikes next year, if unemployment stays low and inflation increases.
Sources: Bloomberg, CNBC, CNBC, MarketWatch, Mortgage News Daily, Reuters