30
Apr
By First Rate Financial Group
Market Outlook

Case-Shiller: February Home Prices Gained Before Coronavirus Outbreak

Case-Shiller February Home Prices Gained Before Coronavirus OutbreakHome prices continued to grow in February according to the Case-Shiller Home Price Indices. National home prices grew at a seasonally-adjusted annual pace of 4.20 percent as compared to national home price growth of 3.90 percent in January. Case-Shiller’s 20-City Home Price Index showed higher home price growth rates in February with average annual home price growth of 3.50 percent. January home prices grew by 3.10 percent for cities included in the 20-City Index.

The lowest year-over-year home price growth rates were posted by Chicago, Illinois with 0.70 percent; New York City posted 1.50 percent growth, and Dallas, Texas with 2.50 percent home price growth.

Phoenix, Arizona home prices grew by a seasonally-adjusted annual rate e of 7.50 percent; Seattle, Washington home prices grew by 6.00 percent year-over-year. Tampa, Florida’s home price growth was tied with Charlotte, North Carolina’s home price growth rate of 5.20 percent. Analysts said that long-standing market conditions of high buyer demand, low inventories of available homes, and mortgage rates near record lows contributed to February’s home price growth.

Gains Across 20 City Composite

Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, said February results “were broad-based with gains in every city in our 20-City Composite; 17 of 20 cities saw accelerating prices.”

February readings were based on home sales completed before the Coronavirus impacted the U.S. economy and government restrictions on all but essential activities reduced buyer traffic and slowed home sales. Areas supported by tourism and recreation were expected to see sharp declines in home prices and sales.

Fed Promises to Use All Remedies as Coronavirus Crisis Grows

The Federal Reserve’s Federal Open Market Committee said it would use all available tools to steady economic conditions destabilized by the Coronavirus pandemic. The FOMC said in its post-meeting statement that “The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook in the medium term.”

Committee members did not change the current federal interest rate range of 0.00 to 0.25 percent and pledged to hold the Fed rate steady until the economy has weathered the public health crisis and was on track to achieve the Fed’s dual mandate of full employment and price stability.

 

20
Feb
By First Rate Financial Group
Market Outlook

NAHB: Home Builder Confidence Near 1999 High

NAHB Home Builder Confidence Near 1999 HighThe National Association of Home Builders reported a housing market index reading of 74 in February; the index reading was one point lower than for January and was only two points below the highest reading of 76 reported in December. Readings over 50 indicate that most builders consider housing market conditions to be positive.

Factors contributing to builder confidence included strong housing markets and low mortgage rates; job growth and higher wages also boosted builder confidence.

Low Inventory Influences Home Prices

Low inventories of available homes continued to drive demand and rising home prices. Homebuyers faced with low supplies of existing homes turned to new home developments for additional options. First-time homebuyers faced obstacles including affordability and student loan debt that negatively impacted the ability to save for a down payment and qualify for home loans.

High costs of building materials and lots contributed to homebuilder expenses and higher home prices. Analysts noted that environmental and zoning issues also presented challenges for builders and limited their ability to meet the rising demand for affordable single-family homes.

Composite indices used to calculate the Homebuilders Housing Market Index slipped one point in each category. Builder confidence in current market conditions for newly-built single-family homes fell to an index reading of 80 and builder confidence in market conditions over the next six months dipped to 79. Buyer traffic volume in new housing developments dropped to 57, but buyer traffic readings of 50 or more were historically rare until recently.

Analysts identified correlations between the Housing Market Index and readings on consumer sentiment. The University of Michigan’s Consumer Sentiment Index and the Conference Board’s Consumer Confidence Index readings trend close to the NAHB Housing Market Index but are reported one month behind the Housing Market Index.

Regional Builder Confidence Mixed

Homebuilders reported mixed confidence in housing market conditions throughout the U.S. Market Conditions improved in the Northeast where homebuilder confidence was five points higher at 67. The Midwestern region reported a builder confidence reading of 62, which was five points lower than January’s reading. Homebuilder confidence in the South rose two points to an index reading of 79; homebuilder confidence fell four points in the West to 82.

Regional builder confidence levels reflect local economic conditions and events impacting housing markets.

 

31
Jan
By First Rate Financial Group
Market Outlook

FOMC Statement: Key Fed Rate Unchanged; Policymakers Monitor Impact of Asian Flu Outbreak

FOMC Statement Key Fed Rate Unchanged; Policymakers Monitor Impact of Asian Flu OutbreakThe Federal Open Market Committee of the Federal Reserve issued its scheduled post-meeting statement Wednesday. Policymakers unanimously decided to leave the target federal funds rate range unchanged at 1.50 to 1.75 percent.

FOMC members reasserted previous views that inflation was “subdued” and the economy was growing at a moderate pace. The Fed typically bases decisions about interest rates on its dual mandate of achieving maximum employment and an annual inflation rate of 2.00 percent.

U.S. Economy Strong, Fed Chair Sees No Immediate Risk From China

FOMC cut the target interest rate range three times in 2019 to offset higher prices associated with a trade war with China, but the Committee considered recent progress in trade negotiations as an indication that there was no current need for further rate cuts. Fed Chair Jerome Powell said he was not concerned about immediate risks from China.

In its current assessment of economic conditions, the Fed cited a strong labor market and job growth but said that business investments and exports were weak. Core inflation readings, which exclude volatile food and fuel sectors, consistently ran below 2.00 percent. The FOMC changed language in its statement to indicate a goal of achieving an inflation rate of 2.00 percent; previous statements referred to an inflation goal of near 2.00 percent.

Committee members will continue to monitor current and developing economic conditions to determine when or if to change the benchmark interest rate range in future meetings.

Fed Chair: Fed Is Monitoring Potential Impact Of Coronavirus Outbreak

Concerns over trade conflicts with China were overshadowed by an outbreak of a strain of Asian influenza in China. The disease, caused by a coronavirus, is extremely contagious and spreads quickly. This could impact global economic conditions as international air travel and shipping may be limited or stopped to prevent further spread of the virus.

Fed Chair Jerome Powell said that although the Fed is not worried about an immediate threat, the FOMC members would continue to monitor how and where the current outbreak of Asian influenza spreads to determine if changes to the Fed’s monetary policy positions are necessary. Tensions in the Middle East were not mentioned in the FOMC statement or Fed Chair Jerome Powell’s post-meeting statement.