Daily Spotlight

Home Price Growth Rate Trends Lower

The S&P/Case-Shiller National Home Price Index is one of the most closely watched barometers of the housing market. Data for March was released late last month and showed that prices gained 3.7% year-over-year, down from an average 5.6% in 2018 and reflecting a bit of a slowdown in housing. Looking into the balance of 2019, we expect price hikes to remain in the 3.5%-4.0% range, which is not unhealthy for the industry. To make this forecast, we monitor several leading industry supply and demand indicators. These include inventory levels, which are relatively low. Currently there is a 4.2-month supply of existing homes for sale (the normal range is 3.0-5.5 months), according to the National Association of Realtors. We also track new home sales, which according to the U.S. Census Bureau are running at a 673,000 per year rate, up 7% year over year. We also watch building permits, which have dipped 7% in the past year but still appear to be trending higher since the 2010 housing trough. The bullish case for housing is generally intact. Indeed, borrowing costs have eased as the Fed has moved to the sideline in its rate-hike campaign, and consumer confidence remains high, as unemployment is low. We continue to look for the housing industry to support GDP growth. ...  of Realtors. We also track new home sales, which according to the U.S. Census Bureau are running at a 673,000 per year rate, up 7% year over year. We also watch building permits, which have dipped 7% in the past year but still appear to be trending higher since the 2010 housing trough. The bullish case for housing is generally intact. Indeed, borrowing costs have eased as the Fed has moved to the sideline in its rate-hike campaign, and consumer confidence remains high, as unemployment is low. We continue to look for the housing industry to support GDP growth.    more

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