Discussing the latest home price reports from Case-Shiller and the FHFA, another report shows that buying still beats renting, real estate is still the preferred investment for most Americans, the Richmond Fed Service Sector and Manufacturing reports disappoint, consumer confidence, HUD reopens Facebook investigation and more!
Case-Shiller: US Home Prices Increase Again
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.3% annual gain in February, up from 6.1% in the previous month. The 10-City Composite annual increase came in at 6.5%, up from 6.0% in the previous month. The 20-City Composite posted a 6.8% year-over-year gain, up from 6.4% in the previous month.
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices said:
Home prices continue to rise across the country. The S&P CoreLogic Case-Shiller National Index is up 6.3% in the 12 months through February 2018. Year-over-year prices measured by the National index have increased continuously for the past 70 months, since May 2012. Over that time, the price increases averaged 6% per year. This run, which is still ongoing, compares to the previous long run from January 1992 to February 2007, 182 months, when prices averaged 6.1% annually. With expectations for continued economic growth and further employment gains, the current run of rising prices is likely to continue.
Wow! While national and not the local market information buyers and sellers need, this is great news for the housing market.
Looking locally, the median price of homes reported sold in the WUAR MLS in Anderson County during February 2018 was 6.23% higher than the price reported in February 2017. Remember this is for the entire county and does not reflect what is possible or realistic for every home.
FHFA Home Price Index Up 7.2%
U.S. house prices rose in February, up 0.6 percent from the previous month, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). The previously reported 0.8 percent increase in January was revised upward to 0.9 percent.
The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. From February 2017 to February 2018, house prices were up 7.2 percent.
While somewhat different than the Case-Shiller Indices in what they measure, the results are pretty much the same. US home prices are still rapidly increasing!
However, buying still beats renting in most areas…
Buying Still Beats Renting
According to Attom’s 2018 Rental Affordability Report, buying a median-priced house is more affordable than renting a three-bedroom residence in 54% of U.S. counties! This is probably going to rise since Attom also found that rent is increasing faster than incomes in 60% of counties.
While buying is not the right answer all the time for everyone, there is no denying that owning a home is a great investment in your future…
Stocks Still Trail Real Estate as Preferred Investment
More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name “stocks or mutual funds.” Gold, mentioned by 17%, roughly ties “savings accounts or CDs” at 15%, while only a few Americans, 6%, name bonds.
Nice to see people realize the power of owning real estate as an investment. Owning a home can be a good start to creating a more secure financial future.
Fifth District Survey of Manufacturing Decreases Dramatically
From Richmond Fed:
Results of the most recent survey from the Richmond Fed suggest that Fifth District manufacturing activity slowed in April. The composite index dropped sharply from 15 in March to −3 in April, its first negative reading since September 2016. The index was weighed down by a contraction in shipments and new orders; however, its third component, employment, rose slightly and remained in expansionary territory. The negative reading of the local business conditions index also suggested worsening conditions for District manufacturers, but surveyed firms were generally optimistic that they would see overall growth in the next six months.
Survey results indicate that capital expenditures and wages increased among District manufacturing firms in April as both indicators reached record-high values of 31 and 27, respectively. Despite rising wages, firms continued to report difficulty in finding necessary skills.
Firms saw increased growth in prices paid in April, but growth of prices received continued to slow. Manufacturers expected to see faster growth in both prices paid and prices received in the coming months.
Ouch! The composite index dropping like a stone is pretty scary despite many of the other positive signs in the Richmond Fed’s report. Remember that South Carolina is in the Fifth District.
Fifth District Survey of Service Sector Activity Slows
From Richmond Fed:
The Fifth District’s service sector saw slowing growth in April, according to the results of the latest survey by the Federal Reserve Bank of Richmond. The revenues index dropped significantly, from 25 in March to 2 in April, its lowest value since July 2016. While most measures of service sector growth fell in April, the majority remained in expansionary territory, and firms were still optimistic that they would see an uptick in growth in the next six months.
On the employment front, a smaller portion of firms reported hiring in April than in March, and the weekly hours indicator was negative for the first time since 2013. However, firms generally expected to see growth in the coming months across all four measures of employment.
Prices paid by service sector firms increased at a slower pace again in April, but at a faster rate for prices received, on average. Firms expect to see accelerated growth for both prices paid and prices received in the near future.
Not very good…
The Conference Board Consumer Confidence Index Increased in April
From The Conference Board:
The Conference Board Consumer Confidence Index® increased in April, following a decline in March. The Index now stands at 128.7, up from 127.0 in March. The Present Situation Index increased from 158.1 to 159.6, while the Expectations Index improved from 106.2 last month to 108.1 this month.
Lynn Franco, Director of Economic Indicators at The Conference Board said:
Consumer confidence increased moderately in April after a decline in March. Consumers’ assessment of current conditions improved somewhat, with consumers rating both business and labor market conditions quite favorably. Consumers’ short-term expectations also improved, with the percent of consumers expecting their incomes to decline over the coming months reaching its lowest level since December 2000. Overall, confidence levels remain strong and suggest that the economy will continue expanding at a solid pace in the months ahead.
Finally some good economic news!
Wells Fargo Fined $1 Billion But No Execs Going to Jail
From American Banker:
Don’t let the headlines fool you: Despite its recent $1 billion penalty, Wells Fargo and its top executives are having a pretty good spring.
The bank reported quarterly earnings earlier this month of nearly $6 billion. And executives appear to be getting off the hook for problems in the bank’s mortgage and auto businesses, which spurred the latest penalty from the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau. No executive is even named in the government’s documents.
On top of that, the bank is doing well as a result of the tax-cut package passed late last year.
Major banks, including Wells Fargo, committed massive frauds leading to the 2008 financial crash. Yet not one senior executive served prison time. Wells Fargo’s size — and legal firepower — must not insulate its senior executives from basic accountability. Again.
It is totally ridiculous that so many big banks and financial firms wrecked the global economy yet no senior execs are doing any time. Once again, I must say that until executives are doing serious time, this behavior will not change.
No one going to jail could be interpreted as saying the banks can do whatever they want and the execs do not have to worry about paying for their crimes. Wrong is wrong, even if the crime is white collar crime.
HUD Reopens Facebook Discrimination Investigation
The Department of Housing and Urban Development has reopened an investigation into whether Facebook encouraged housing discrimination.
HUD Secretary Ben Carson disclosed the reopening of the investigation during a Senate panel where he was questioned by Sen. Brian Schatz (D-Hawaii).
“We have actually reopened the Facebook case after having an opportunity to study it,” Carson told Schatz. When Schatz asked if it was the first time the reopening of the investigation was disclosed, Carson said “it may well be.”
I am so glad to see this. Facebook should not let people discriminate in their advertising since no one else can.
If Facebook is found to have broken Fair Housing laws, they should be fined the maximum amount IMHO. They certainly have the money to pay the fines and small fines will not teach them a lesson.
Chemical Activity Barometer Decreases Slightly
From the American Chemistry Council:
The Chemical Activity Barometer (CAB) slipped 0.1 percent in April to 121.6 percent on a three-month moving average (3MMA) basis. This follows six consecutive monthly gains and a dip from the barometer’s highest point since modeling began. The barometer remains up 3.8 percent on a 3MMA compared to a year earlier.
Despite the 0.1 percent decline, all four major components remained strong. April production-related indicators improved with U.S. exports rising again and performance chemistries gaining strength. Equity prices, along with product and input prices also rebounded while inventory remained very positive.
A very small decrease and the key thing is the Chemical Activity Barometer is still up compared to the same time last year. While it isn’t pretty, we should still consider it a win overall.