Market Forecast: Case-Shiller Home Price Index, FHFA House Price Index, Pending Home Sales Index
Markets will be closed today, in observance of Memorial Day. Coming up this week, the S&P CoreLogic Case-Shiller home price index and the Federal Housing Finance Agency (FHFA) house price index are scheduled for release on Tuesday. The National Association of Realtors (NAR) will release its pending home sales index on Thursday.
The Case-Shiller home price index tracks changes in the value of homes that are involved in two or more sales transactions across twenty major metropolitan areas throughout the country. In February, the 20-city index increased 0.2% month-over-month and 3.0% year-over-year. Gains were led by Las Vegas, Phoenix, and Tampa, although no cities saw double-digit rates of annual appreciation. Home price appreciation is expected to continue slowing down; however it is unlikely that values will decrease at a national scale.
The FHFA house price index tracks changes in the value of homes financed through conventional mortgages and not government-sponsored mortgages like the FHA and VA loans. Though this data subset is smaller than the sample used in the Case-Shiller home price index it is still used to gauge home price appreciation trends. In February, the FHFA house price index appreciated 0.3% month-over-month and 4.9% year-over-year.
The pending home sales index tracks changes in the number of homes that are under contract but not yet closed and are used to predict housing market trends. Typically, it takes four to six weeks for a contract to close. In March, pending home sales rebounded, up 3.8% month-over-month. Annually, however, the figure is down 1.2%.
Since contract signings usually precede closings by approximately 45 days, the pending home sales index is an important indicator of future existing home sales activity. With home price appreciation stalling and mortgage rates relatively unchanged in recent weeks, we may be on the brink of a strong summer housing market.
Sources: CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily