Market Recap: Case-Shiller Home Price Index Up, Construction Spending Rebounds, and No Rate Hike
Mortgage rates did not move much either way this week. The Federal Open Market Committee (FOMC) met on Tuesday and Wednesday and, as expected, voted to leave interest rates unchanged. On Thursday, President Trump announced Jerome Powell would be the next Chairman of the Federal Reserve, after current Fed Chair Janet Yellen’s term expires in February 2018. The Case-Shiller home price index appreciated and US construction spending rebounded slightly.
The S&P CoreLogic Case-Shiller home price index tracks the changes in the value of homes previously involved in two or more sales transactions in 20 major metros across the country. In August, the index increased 0.5% month-over-month and 5.9% year-over-year. Gains were driven by Seattle, Las Vegas, and San Diego, with only San Francisco showing a decrease. According to S&P Dow Jones indexes managing director David Blitzer, national “home prices have reached new all-time highs.”
US construction spending tracks the amount spent on public and private construction projects. In September, total construction spending increased 0.3% to a value of $1.22 trillion. Private construction spending slipped, and residential construction was unchanged. Public spending improved, state and local government projects increased 2.5% and federal government projects increased 3.4%.
The FOMC met Tuesday and Wednesday. From the meeting, the Fed upgraded its assessment of the health of the economy, but stated that recent inflation had been soft and below the 2% target rate. Most economists believe the next rate hike will take place after the December meeting, proving last year’s three rate-hike projection.
In February, Jerome Powell will succeed Janet Yellen as Federal Reserve Chair. President Trump said the Federal Reserve was in need of “strong, sound and steady leadership,” and that Powell will “provide exactly that type of leadership.” Powell will likely be supportive of slow gradual interest rate hikes, like Yellen. However, Powell views deregulation more favorably, like President Trump. Yellen has the option of remaining on the Federal Reserve Board until 2024.
Sources: CNBC, MarketWatch, NPR, Reuters