• Home Prices Rise for Fourth Month, Consumer Confidence Drops

    Home Prices Rise for Fourth Month

    U.S. home prices extended their streak of big year-over-year price gains for the fourth consecutive month in March, posting a 20.6% increase, according to a widely watched measure from S&P Dow Jones Indices. That’s the highest annual nationwide rise in the more than 35 years the financial data provider has tracked the statistic.

    Also, a 20-city composite index compiled by S&P with economists at Case-Shiller and CoreLogic showed the annual increase was even greater, at 21.2%. Tampa, Florida, led the year-over-year gainers at 34.8%, followed by Phoenix at 32.4% and Miami at 32%.

    “Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer,” Craig Lazzara, managing director at S&P Dow Jones Indices, said in a statement Tuesday. “The strength of the composite indices suggests very broad strength in the housing market, which we continue to observe.”

    Home prices are among factors gauged by multifamily investors. That's because families in higher-cost states have long been priced out of the single-family market and often rely on rental housing until they can save for down payments. Rising home mortgage rates, which have declined slightly in recent weeks but remain well above year-earlier levels, have also helped to raise apartment demand in some cities.

    “Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary price growth for much longer,” Lazzara said. “Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call.”

    Consumer Confidence Drops

    Faced with high inflation and rising interest rates, the confidence of consumers in the economy and their own financial prospects declined slightly in May, according to the latest monthly survey report by the Conference Board, a prominent business research organization.

    Survey data pegged the Consumer Confidence Index at 106.4, down from 108.6 in April, with 1985 used as a base of 100. The Present Situation Index, based on current business and labor market conditions, is now at 149.6, down from 152.9 in April.

    The group's Expectations Index, based on the short-term outlook of consumers for income, business and labor market conditions, is at 77.5, down from 79 in April. Conference Board economists said consumers anticipate a future softening in labor market conditions, even as they remain upbeat about current conditions in the short run.

    “Meanwhile, purchasing intentions for cars, homes, major appliances and more all cooled — likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement Tuesday.

    Vacation plans “have also softened” as inflation remains top of mind for consumers. “Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year,” Franco said.

    Source: www.CoStar.com