Morning Report: Home prices rise

Vital Statistics:

Stocks are lower this morning on no real news. Bonds and MBS are down small.

Home prices rose 4.6% year-over-year, according to the FHFA House Price Index. “U.S. house prices continued to appreciate in July, consistent with the trend observed over the last several months.” said Dr. Nataliya Polkovnichenko, Supervisory Economist in FHFA’s Division of Research and Statistics. “Regionally, all nine census divisions posted positive price appreciation over the last 12 months, although the Pacific and Mountain divisions experienced only modest growth.”

The biggest growth is in the Northeast and Mid-Atlantic, while the hottest markets from the pandemic years are lagging.

The Case-Shiller Home Price Index rose 1% on a YOY basis in July. The Index has now recouped all of the losses experienced between June 2022 and January 2023. The Index also sees similar regional differences: “That said, regional differences continue to be striking. On a year-over-year basis, the Revenge of the Rust Belt continues. The three best-performing metropolitan areas in July were Chicago (+4.4%), Cleveland (+4.0%), and New York (+3.8%), repeating the ranking we saw in May and June. The bottom of the leader board reshuffled somewhat, with Las Vegas (-7.2%) and Phoenix (-6.6%) this month’s worst performers.

New Home Sales fell 8.7% YOY to a seasonally-adjusted annual rate of 739k. This was up 5.8% on a YOY basis. The inventory of houses for sale ticked up to 436k, which is a 7.8 month supply. Given the shortage of existing homes for sale, activity in the housing market will need to be driven by new home sales.

Consumer Confidence fell in September, according to the Conference Board. “Consumer confidence fell again in September 2023, marking two consecutive months of decline,” said Dana Peterson, Chief Economist at The Conference Board. “September’s disappointing headline number reflected another decline in the Expectations Index, as the Present Situation Index was little changed. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”

As noted in the quote above, consumer confidence indices often are inverse gasoline price functions.