Commentary
~ December 4, 2015
While most of us were more engaged by cooking, eating, visiting, and shopping than by what was happening on the housing front, the gears ground on without us. There is a lot to catch up on.
Three major price indices–the Case-Shiller and the Federal Housing Finance Agency’s indices for September and CoreLogic’s Home Price Index for October all disproved conventional wisdom that price gains are due to start winding down. All three data sets posted annual gains that were higher than the month before by anywhere from 30 to 50 basis points. Case-Shiller spokesman David Blitzer pointed out that these home price gains are also outstripping other prices; the National Index rose 3% in September, net of inflation.
CoreLogic continues to predict that price hikes will moderate and sees the most recent 6.8% annual increase slowing to 5.2% between October 2015 and October 2016.
October’s New Home sales figures were substantially better than September’s, rebounding by 10.7% to a seasonally adjusted annual rate of almost half a million sales.
Existing home sales didn’t fare as well, dipping 3.4% from September’s numbers. The decline wasn’t a surprise as pending sales had dropped in each of the previous two months. Things may improve slightly next month as the Pending Sales Index eked out a 0.2% gain in October, a change likely to be reflected in November and December closed transactions.
And it wouldn’t be Friday if we didn’t speculate on the Federal Reserve’s next move. This time Fed Chair Janet Yellen made it too easy, saying in a speech on Wednesday that she was “looking forward” to an interest rate hike, viewing it as a testament to the nation’s recovery. While she didn’t say she expected a rate hike at the December 15-16 Open Market Committee meeting she noted that the labor market was still healing and the foreign influences dragging on the country’s economic growth and inflation should soon ease.
The only other bit of news was construction spending. While the numbers–spending is now at a rate exceeding a trillion dollars–were not changed much from September to October they are well ahead of last year–up 13% for all construction and 16.8% for residential spending.
Very little on the housing agenda for next week–the calendar is already starting its reset to 2016.