Sales rates are tracking at roughly double the pace of price growth, a mismatch that points ahead to price acceleration given how thin inventories are right now in the housing sector.
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This report has been showing slightly more strength than S&P/Case-Shiller indices, where year-on-year price appreciation is at 5% by the FHFA’s reckoning.
U.S. home rents jumped in July as house prices showed signs of flagging. Denver reported a 10.2% price increase over the year, San Francisco saw a 9.5% price increase, and Dallas showed an 8.2% increase. The National Association of Realtors said last week that sales of existing homes rose 2 per cent in July to a seasonally adjusted annual rate of 5.59 million, fastest pace since February 2007. “However, if the Fed were to quickly follow that initial move with one or two more rate increases, housing and home prices might suffer”, he said. “A full-blown bear market dropping more than 20% could present some difficulties for housing and other economic sectors”. The 10-city and 20-city indexes saw a 0.9% and 1% change over the month respectively.
David Blitzer, head of the Index Committee at S&P Dow Jones Indices, noted the resilience in the housing market as unemployment has fallen and the Federal Reserve has held its near-zero interest rate policy since 2008 to support the US economy’s recovery from the Great Recession. Blitzer says a modest Fed rate increase “won’t derail housing”.
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The Southern California housing market has experienced a robust spring and summer this year, with sales hitting multi-year highs. The June figures are the latest available.
