Most measures of existing home prices increased again in July. New home prices weakened a bit in the month and continued to weaken in August. NAR’s measure of median prices showed weakness in July and August as well, but this may be due in part to the end of the stronger home buying season and a shift in the mix of homes selling.
Over the year, home prices are down a bit, but the decline is generally small, especially in the distressed-excluded data. Housing market activity is seasonal, so year over year comparisons are typically the most informative.
Previously, new homes had shown better price performance over the year; August showed a sharp reversal of this trend. Low levels of new construction and very little activity in the new home sector may be causing substantial volatility in the data.
Distressed sales , which hold back existing home prices, continue to comprise about 30 percent of sales—down from nearly 40 percent earlier in the year. This should reduce drag on home prices.
Stable-to declining inventories will also help support prices.
Further, rising apartment rents and stable affordability conditions make a home purchase a good alternative to rental housing.
Renewed job growth, confidence, and available financing are necessary for consumers to take advantage of buying opportunities.
Some indicators, such as average FICO scores of those obtaining mortgages, show signs of improvement, though modest. But contrary forces in the form of lower loan limits do not bode well for credit availability.
Home Prices Sources: NAR, Case-Shiller, CoreLogic, FHFA, Census, HAVER
Home Price Data – Year over Year Change Sources: NAR, Case-Shiller, CoreLogic, FHFA, Census, HAVER
Home Price Changes *All data are not seasonally adjusted. Monthly changes should typically be computed only for Seasonally Adjusted (SA) data. Because these change rates are often covered in the media regardless of their suitability for analysis, they are presented here but should be used with caution. Annual (yr-over-yr) changes computed for Not Seasonally Adjusted (NSA) data give a measure that is not affected by seasonal fluctuations. Sources: NAR, Case-Shiller, CoreLogic, FHFA, Census, HAVER
Spread of Existing Home Price Changes Year over Year Sources: NAR, Case-Shiller, CoreLogic, FHFA, HAVER
Supply and Demand Factors – Inventory Sources: NAR
Supply – New Housing Starts and Permits Sources: Census
Underlying Demand – Job Growth and Hires Sources: BLS
Potential Job Growth – Openings Sources: BLS
Housing Affordability Sources: NAR
About the Price Data Series Sources: NAR, Case-Shiller, CoreLogic, FHFA, Census, HAVER