Positive news continues to hit the housing market. All indications are that home prices are firming up and even beginning to trend significantly higher. This seems even more apparent especially in markets where there is a significant shortage of homes for sale.
On Tuesday the S&P Case-Shiller Home Price Index delivered better than expected news on home prices. For the month of February prices rose 0.9 percent which is two tenths higher than analyst’s expectations. This increase continues the momentum that we have been experiencing since late 2013.
An additional positive aspect to the report is that the momentum of home price growth appears to be trending upward. This is most likely due to the aforementioned inventory shortages in many markets. The index is 5.0 percent higher than it was at the same time last year. Additionally, the spread between prices on the year on year averages is growing as well.
Further bolstering the positive housing trend was the pending home sales report released on Wednesday. For the 3rd straight month pending homes rose. The increase of 1.0 percent was right in line with expectations. This increase piggy backs on February’s surge of 6.1 percent.
The greatest increase was reported in the south which showed an increase of 4.0 percent which represents a 12.4 percent increase from the same time last year. The second strongest market is the west which rose 1.7 percent. A strong factor in this report is that the west is now 15.6 percent higher than last year. Overall the year on year improvement for all regions combined is 11.1 percent higher.
The anticipated announcement from the Fed’s FOMC meeting was met with some sour reaction as the Fed continues to move closer and closer to an interest rate increase. The focus of the Fed’s announcement appeared to be centered around recent weaker than expected economic data. Although typically weakness in the economy could indicate a possible delay in an interest increase, the Fed used language that they feel the weakness is temporary and not indicative of the direction of the economy.
The first quarter of 2015 by all measures was slower than expected. The Fed indicated their displeasure with the data however they stopped short of saying they would prolong the anticipated rate hike for June. Everything is subject to change; however Wall Street was hoping that the Fed would make a more definitive statement on delaying a move on rates. For now everyone must take a wait and see attitude on how the Fed delivers their message at next month’s meeting.
This week’s potential market moving reports:
- Monday May 4th – Factory Orders
- Tuesday May5th – ISM Non-Manufacturing Index
- Wednesday 6th – MBA Applications and ADP Employment Report
- Thursday May7th – First Time Jobless Claims
- Friday May 8th – National Employment Report