Blog posted On May 28, 2018
Markets are closed today in observance of Memorial Day. Coming up this week, the S&P CoreLogic Case-Shiller home price index will reveal whether or not home price appreciation has started to slow down. The ADP employment report is scheduled for release on Wednesday. Thursday’s pending home sales index will help predict housing’s direction heading into the summer.
The Case-Shiller home price index tracks changes in the values of homes involved in two or more sales transactions across twenty major metropolitan areas around the country. The data lags by one month and is used to gauge home price appreciation trends. In February, the 20-city index appreciated 6.3% annually and 0.8% month-over-month. Appreciation was driven by Seattle, Las Vegas, and San Francisco, each posting double digit annual increases. Home prices have steadily appreciated as limited for-sale inventory pushes prices up.
The ADP employment report is based on data from approximately 400,000 US businesses employing approximately 23 million employees around the country. Though the data set is limited to private businesses, it is used to determine employment trends and the health of the labor market. In April, job growth pulled back slightly from March’s strong growth, with the addition of 204,000 jobs, marking the sixth straight month with the addition of over 200,000 jobs. Unemployment is at a historically low level and jobless claims are on the lowest streak since the 1970s. As the labor market nears full employment, the biggest problem employers are facing is the ability to find skilled workers to fill open positions.
Pending home sales count homes that are under contract but not yet closed. Typically, it takes four to six weeks for a contract to close. In March, pending home sales ticked up a slight 0.4% month-over-month and declined 3% year-over-year. Lack of inventory is hurting home buying and selling activity. Regionally, only the South and Midwest showed increases, up 2.5% and 2.4% respectively month-over-month. The Northeast fell 5.6% month-over-month and the West dropped 1.1 % month-over-month.
As home values appreciate, many homeowners are considering tapping into home equity to renovate their homes or pay down other debts. With limited for-sale inventory, some homeowners are choosing to stay in their homes longer. Using home equity for renovation or remodel is one way homeowners can adjust their current home to fit their needs. Home equity can be accessed through a cash-out refinance or home equity line of credit. Before choosing a cash-out refinance or home equity line of credit, it is best to consult a mortgage professional to weigh the benefits and risks of each option.