The rate of home price gains slowed slightly between April and May, but there was less than a 1% change in each of the three S&P CoreLogic Case-Shiller indices and the FHFA House Price Index.
The nine census divisions included in Case-National Shiller’s Home Price Index increased 19.7% from May 2021 to May 2022. However, the 20-City Composite dipped to 20.5 percent from 21.2 percent in the prior month. The 10-City Index increased 19.0 percent compared to a 19.6 percent from April 2021 to April 2022.
Craig J. Lazzara, Managing Director at S&P DJI said, “The market’s strength continues to be broadly based, as all 20 cities recorded double-digit price increases for the 12 months ended in May. May’s gains ranked in the top quintile of historical experience for 19 cities, and in the top decile for 17 of them. However, at the city level we also see evidence of deceleration. Price gains for May exceeded those for April in only four cities. As recently as February of this year, all 20 cities were accelerating.”
Pending Home Sales Fell 20% in June As Mortgage Rates Soared
The National Association of Realtors reported that in June, fewer contracts were signed to buy existing homes than the same time the prior year. With the exception for the first two months of the coronavirus pandemic lockdowns, when sales momentarily declined and then dramatically increased, that is the slowest pace since September 2011.
Pending home sales decreased every month by a larger-than-anticipated 8.6 percent. A 1 percent decline was forecast by economists polled by Dow Jones. A substantial increase in mortgage interest rates coincided with the severe declines.
The South and West experienced the worst of the sales decline, which was widespread. Pending sales in the Northeast decreased 17.6 percent from June 2021 and 6.7 percent from May. In the Midwest, sales were down 13.4 percent annually and 3.8 percent monthly. Sales in the South fell 19.2 percent from the prior year and 8.9 percent monthly. The worst results were seen in the West, where sales fell by 30.9 percent from June 2021 and 15.9 percent each month.
The U.S. Is Currently Not In A Recession, According to Fed Chair Jerome Powell
Federal Reserve Chairman Jerome Powell stated on Wednesday that he does not think the U.S. economy is in a recession. “I do not think the U.S. is currently in a recession and the reason is there are too many areas of the economy that are performing too well,” Powell said at a press conference following the Fed’s decision to raise rates by 0.75 percentage point for a second consecutive time. “This is a very strong labor market … it doesn’t make sense that the economy would be in a recession with this kind of thing happening.”
The Fed has recently increased interest rates to combat the most significant inflationary pressures in approximately 40 years. Following the announcement of the rise, markets surged, with the tech-heavy Nasdaq Composite rising 4 percent and the Dow Jones Industrial Average gaining more than 450 points.
Investors worry that the Fed’s rate hike campaign could push the economy into a recession. Still, Powell also stated that the central bank would closely monitor economic data to determine future movements. He said there would come a time when the Fed needs to limit the rate of hikes, even though another significant boost may be required.
Next week’s potential market moving reports are:
- Monday, August 1st – Construction Spending
- Tuesday, August 2nd – Job Openings, Quits
- Wednesday, August 3rd – Rental Vacancy Rate, Homeowner Vacancy Rate
- Thursday, August 4th – Initial Jobless Claims, Continuing Jobless Claims, Trade Deficit
- Friday, August 5th – Unemployment Rate, Average Hourly Earnings
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.