Homebuyer Confidence Reaches an 18-Year High
While home price gains are growing at a slower pace according to a report released This Week in Real Estate by economists with Freddie Mac, the Consumer Confidence Index has spiked to the highest level since October 2000. Below are a few highlights from the fourth week of September that influence our business:
Home Price Gains Decelerate to 11-Month Low
“Amidst homebuyers’ budget constraints and slight improvements in supply levels, home prices grew at a slower pace last quarter,” economists at mortgage financier Freddie Mac said Monday. “For the year, we anticipate that home prices will increase 5.5%, with the growth rate moderating to 4.5% in 2019.” Home-price gains were weaker in the three-month period ending in July than in the prior month. The Case-Shiller national index rose a seasonally adjusted 0.2% and was up 6.0% for the year in July, down from a 6.2% increase in June. The more closely-watched 20-city index had notched a 6.4% gain last month. Those were the slowest paces of growth since last summer.
Pending Home Sales Continue to Slide
Pending home sales have decreased on an annual basis for eight consecutive months, and have declined month over month in four of the past five months. The Pending Home Sales Index decreased 1.8% in August, and is now down 2.3% year over year. The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts reported by the National Association of Realtors. The PHSI decreased to 104.2 in August, from 106.1 in July. The PHSI decreased in all four regions, ranging from a 5.9% decrease in the West to 0.5% in the Midwest. Year-over-year, the PHSI increased by 1.3% in the South, but decreased 11.3% in the West, 1.6% in the Northeast and 1.1% in the Midwest. NAR attributes the slowdown to the chronically low inventory, and the slowdown in existing sales mirrors the summer soft patch in new home sales. However, NAR reported a record high number of Americans now believe it is a good time to sell. Despite flat existing sales, builder confidence remained firm in September. The accelerating economic growth in the second quarter of 2018 fueled the job market, and the demand for new residential construction will continue to grow.
Consumer Confidence Reaches 18-Year High
Consumer confidence continued to rise in September, after a big increase in August. Currently, consumers are quite optimistic about both the current situation and the near-term outlook. The Consumer Confidence Index, reported by the Conference Board, increased to 138.4 in September, from 134.7 in August. It has surpassed the 2007 peak of 111.9 and spiked to the highest level since October 2000. Both the present situation index and the expectations index rose in September. The present situation index rose by 0.3 point from 172.8 to 173.1 and the expectations index jumped by 6.0 points from 109.3 to 115.3. The September increase in consumer confidence was mainly generated by an increase in the expectations index.