Market Forecast: Case-Shiller Home Price Index, New Home Sales, Pending Home Sales
Last week, the Federal Open Market Committee met for its semiannual economic policy meeting and voted to leave the benchmark interest rate unchanged. This week, the Case-Shiller home price index, new home sales, and the pending home sales index are all scheduled for release.
The S&P CoreLogic Case-Shiller home price index tracks changes in the value of homes involved in two or more sales transactions across 20 major metropolitan areas spread throughout the country. Though the data lags one month, it is used to determine home value trends. Tightened housing inventory has driven the index up each month this year. In July, the 20-city index appreciated 0.1% month-over-month and 5.7% year-over-year.
New home sales comprise a smaller segment than existing home sales, but are still valuable in evaluating the health of the housing market. In July, new home sales declined to a level of 571,000. The construction industry is struggling to keep up with the demand for housing. Continued hurricane recovery is expected to influence housing and construction reports for August and September.
Pending home sales measure total homes under contract but have not yet closed. It can typically take up to four to six weeks to close a home sale. In July, the pending home sales index declined slightly 0.8% to a level of 109.1.
The major topic of last week’s meeting was not interest rates but instead the reversal of quantitative easing. The Fed announced that it would begin unwinding the $4.5 trillion balance sheet it accrued during its massive bond buying during the financial crisis. Despite slowed inflation, Fed Chair Janet Yellen signaled there still might be a rate hike later this year.
Sources: Bloomberg, MarketWatch, MarketWatch, Mortgage News Daily