Discussing home prices, affordability, the NY Fed’s latest report on the economy, the cost of construction materials and more about the anniversary of the economy crashing!
Home Prices Rising Faster Than Projected
Every month, CoreLogic looks at the actual year-over-year change in prices across the country and their predictions for the following year in their Home Price Insights Report.
They are predicting that home values will grow by 4.8% over the course of 2018. If we look at home price appreciation so far in 2018, we can see that home prices have increased by an average of 6.9% and have outpaced their predictions:
You must remember that CoreLogic is talking about home prices for the entire country. This is why anyone looking to buy or sell MUST work with a local experienced Realtor to ensure their success!
NAR just shared some interesting news about affordability:
At the national level, housing affordability is up from last month but down from a year ago. Mortgage rates rose to 4.75 percent this July, up 14.7 percent compared to 4.14 percent a year ago.
Affordability is a long drawn out way of computing if a typical family could qualify for a mortgage loan on a typical home. There are many different variables to consider when someone looks at whether buying a home makes sense for them.
And the chart above showed something that anyone thinking about buying a home should consider: rising home prices!
Price of Construction Materials Falls
Good news from Associated Builders and Contractors:
Prices for inputs to construction fell 0.5 percent in August but are 8.1 percent higher than at the same time one year ago, according to an ABC analysis of Bureau of Labor Statistics data. Nonresidential construction input prices fell 0.4 percent in August but are up 8.3 percent year-over-year. Softwood lumber prices plummeted 9.6 percent in August yet are up 5 percent on a yearly basis (down from a 19.5 percent increase year-over-year in July).
Sadly, ABC Chief Economist Anirban Basu says this won’t last and we could see material costs increase for the remainder of 2018 and into 2019.
Snippet from the NY Fed’s September 2018 US Economy in a Snapshot Report:
Housing activity indicators remained soft in July. However, tight housing supply and a strong labor market have the potential to provide support to the housing sector, even with higher mortgage interest rates.
Payroll growth was robust in August, but was revised downward for both June and July. The unemployment rate was unchanged, and both the labor force participation rate and the employment-to-population ratio fell. The latest readings of various measures of labor compensation point to increased firming of wage growth.
Core PCE inflation continued to run at a level roughly consistent with the FOMC’s longer-run objective.
Notice that the Fed thinks that the housing market can weather the low inventory and rising mortgage rates despite rising mortgage rates.
How many consumers are encouraged by the strong economy/job market and will buy a home?
How many consumers realize that mortgage rates are still historically low?
Only time will tell…
If you missed yesterday;s post that included some must read articles about 0 year anniversary of the economy and housing market hitting the skids, you may want to check those out here. But here are even more must read articles:
All good reads for a very rainy Sunday afternoon. That is all I have time for today but be sure to check back tomorrow night for the latest Market Report!