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May 6, 2019
Doctors > Home prices grow at a slower rate in February: S&P Case-Shiller
Doctors > National home prices rose 4% in February from a year earlier, according to the latest reading on the S&P CoreLogic Case-Shiller home price index. That is down from a 4.2% annual gain in January.
The 10-City Composite rose 2.6% annually, down from 3.1% in the previous month. The 20-City Composite posted a 3% year-over-year gain, down from 3.5% in January.
Prices have been gaining since 2012, but in the past year those gains have been shrinking due to higher mortgage rates and a general overheating of values in most metropolitan markets, which hurt sales.
“Home sales drifted down over the last year except for a one-month pop in February 2019,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “Sales of new homes, housing starts, and residential investment had similar weak trajectories over the last year.”
While it is unlikely that home values will go negative on a national level, some areas did see home prices fall annually in March for the first time since 2012, according to CoreLogic. Home prices had overheated far beyond historical affordability levels, causing home sales to drop dramatically in the past eight months.
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Pending home sales show signs of hope in March
Pending home sales advanced 3.8% in March as lower mortgage rates brought more buyers into the market, according to the latest report from the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew to 105.8 in March, rising from February’s 101.9.
However, year-over-year contract signings declined 1.2%, marking the 15th consecutive month of annual decreases.
Additionally, activity in the four major regions varied as the PHSI in the Midwest, South and West rose and the Northeast declined.
NAR’s Chief Economist Lawrence Yun said although home sales data has been exceptionally volatile over the past several months, he predicts numbers will begin to climb more consistently.
“We are seeing a positive sentiment from consumers about home buying, as Mortgage applications have been steadily increasing and mortgage rates are extremely favorable,” Yun said.
In fact, Yun noted that sales activity in the West increased at a relatively stable rate for five consecutive months before the region saw a significant spike in March.
And despite some affordability issues in the West, Yun said the numbers indicate that there is a reason for optimism.
Pending contracts appear to be on an overall upswing and current sales activity is underperforming, according to Yun.
“In the year 2000, we had 5 million home sales,” Yun said. “Today, we are close to that same number, but there are 50 million more people in the country. There is a pent-up demand in the market, and we should see a better performing market in the coming quarters and years.”