What Home Buyers Need to Know

January 4, 2016

Stephens Short Banner

2015 ended with reports coming from the S&P/Case Shiller Home Prices, Pending Home Sales, and Consumer Confidence.

The Case-Shiller Home Price Index posted double digit gains in housing for October. The Case-Shiller Home Price Index, is a look-back index and why we are getting October’s data now. Denver, CO, Portland, OR and San Francisco, CA all tied for the highest home price gains in October, with year-over-year home price gains of 10.90 percent.

The nation’s lowest annual price gains came from Chicago, IL at just 1.30 percent and coming second to last was Washington, D.C with a year-over-year –reading of just 1.70 percent.

Overall home prices have risen at their fastest rate since August 2014 according to the Case-Shiller Home Price Index, while month-to-month home prices showed mixed results in October.

Miami, Florida posted the highest month-to-month gain at 0.70 percent, while San Francisco, CA, Phoenix, AR and Portland, OR posted gains of 0.60 percent.

Cities that showed month-to-month declines in home prices included Chicago, IL at a decline of 0.70 percent, while Cleveland, OH and San Diego, CA posted declines of 0.40 percent. Washington, DC has the least month-to-month decline, coming in at 0.30 percent.

Home prices in Boston, MA and Las Vegas, NV were unchanged in October from September’s reading.

This month’s report show us that according to the index, home prices remain (on average) 11 to 13 percent below their 2006 peaks, but furthermore tell us that home prices are 36 percent higher than the lowest price point in 2012.

The National Association of Realtors® provided its report on Pending Home Sales and showed sales dipped 0.90 percent in November after posting a 0.20 percent gain in October, while most housing analysts were banking on a 1.0 percent gain for November.

Pending Home Sales saw their peak in May 2015, but since then short supplies of affordable housing have diminished in many parts of the country. In turn, shortages create rising prices, which have caused many would-be home buyers to remain on the fence.

November’s Pending Sales were still 2.70 percent higher, based on year-over-year readings.  Although the index has increased year-over-year for 15 consecutive months, November’s annual gain has been the smallest since October 2014, which came in at 2.6 percent.

Regionally the Northeast reported a reading of 91.8, which was nearly three points lower than October’s report.  The Western region posted a reading of 100.4, or a decline of nearly 6 points.  The Midwestern region posted gains, but only at one point with a reading of 104.9. The South had the best reading of 119.9, which represented an increase of 1.50 percent.

The National Association of Realtors® expects sales of existing homes to reach 5.25 million in 2015, and that would be the highest reading since 2006. Currently, the national median price for an existing home is $220,700 and six percent higher than in November 2014.

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Last Thursday Freddie Mac provided us with their lender survey, on average mortgage rates and showed rates rose across the board week-over-week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 4.01 percent, while the average rate for a 15-year fixed rate mortgage was two basis points higher at 3.24 percent. Discount point averaged in at 0.6 percent.

Ending the year on a positive note was Consumer Confidence with a year-end increased reading of 96.5 in December, as compared to November’s upwardly revised reading of 92.6.

What’s Ahead for the Week?

This week we’ll get reports on construction spending, Non-farm Payrolls report and the ADP payroll reports.


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