Home Prices Have Exceeded Average Annual Gains

The National Association of Realtors reported This Week in Real Estate a 4.9% decline in January pending sales compared to the previous month and an 8.8% drop year-over-year. Home prices continued their upward trend, hitting a new all-time high in December, with the S&P CoreLogic Case-Shiller U.S. National Home Price Index showing a 5.5% annual gain and a 0.2% month-over-month increase. This marks the highest year-over-year gain in the past twelve months, and national home prices are now 70% higher than their last peak in March 2006. Moreover, spending on single-family construction increased by 0.2% in January, marking the ninth consecutive monthly rise since April 2023, according to the National Association of Home Builders. Below are a few newsworthy events from the fourth week of February that influence our business:  
SINGLE-FAMILY CONSTRUCTION SPENDING CONTINUES TO RISE. NAHB analysis of Census data shows that private residential construction spending rose 0.2% in January 2024. It stood at a seasonally adjusted annual pace of $900.8 billion. The monthly increase in total construction spending is attributed to more single-family construction. Spending on single-family construction rose 0.6% in December. This is the ninth consecutive monthly increase since April 2023. It is aligned with the strong reading of 1.33 million single-family starts in January. Compared to a year ago, spending on single-family construction is 12.5% higher. Read the full story here.
PENDING HOME SALES RECEDED 4.9% IN JANUARY. Pending home sales in January dropped 4.9%, according to the National Association of REALTORS®. Year over year, pending transactions were down 8.8%. The Northeast and West posted monthly gains in transactions while the Midwest and South recorded losses. All four U.S. regions registered year-over-year decreases. “The job market is solid, and the country’s total wealth reached a record high due to stock market and home price gains,” said NAR Chief Economist Lawrence Yun. “This combination of economic conditions is favorable for home buying. However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.” Read the full story here.
HOME PRICE HIT A NEW ALL-TIME HIGH IN DECEMBER, SAYS CASE-SHILLER. The national index rose 0.2% in December and was also up 5.5% over the past year. The 20-city and the national index are at all-time highs. A separate report from the Federal Housing Finance Agency also showed home prices rose 0.1% in December from the last month and were up 6.6% in the past year. The FHA also noted that the housing market has experienced annual home price growth every quarter since the start of 2012. “Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years,” Brian D. Luke, head of commodities, real & digital assets at S&P Dow Jones Indices, said in a statement.  Read the full story here.

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