Blog posted On October 29, 2018
Heading into the end of the month, there are a couple more housing reports scheduled for this week. The S&P CoreLogic Case-Shiller home price index will come out on Tuesday and the US construction spending report comes out on Thursday. In other market-moving news, the ADP employment report is scheduled for release on Wednesday.
The Case-Shiller home price index is based on the changes in the value of homes involved in two or more sales transactions across twenty major metropolitan areas throughout the United States. Though the data lags by one month, it is used to gauge home price appreciation trends. After months of steady increases, home price appreciation has started to plateau as home buyers face affordability issues, especially in some heated markets. In July, the Case-Shiller home price index appreciated 0.3% month-over-month and 5.9% year-over-year. Price appreciation was driven by Las Vegas, Seattle, and San Francisco, with each metro posting double-digit annual gains.
The ADP employment report is based on data from approximately 400,000 US businesses, employing approximately 23 million US workers. The data subset is limited to private sector employers using the ADP payroll system. In September, the ADP employment report added 230,000 jobs, much higher than expectations. Moody’s Analytics Inc. chief economist Mark Zandi stated, “the job market continues to power forward. Employment gains are broad-based across industries and company sizes.” At this strong growth rate, the unemployment rate is expected to continue falling.
US construction spending counts total spending on all public and private construction projects. In August, total construction spending increased 0.1% month-over-month. Spending on public projects increased 2.0%, driven by an increase in federal government spending. Private residential construction spending fell 0.7% month-over-month but was up 4.1% year-over-year.
In September, construction hiring increased by 34,000, the largest gain in 2018. The construction industry has faced some challenges with the rising costs of materials and a shortage of labor. With buyer demand strong, home builders are expected to stay busy.