The FHFA Housing Price Index remained unchanged in January – I had forecast an increase of 0.5%.  Year-over-year, home prices are up by 5.7% (down from an annual growth rate of 6.2% in December).


It was interesting to see home prices in the US come to a stop relative to monthly growth for only the second time since 2012.

I believe that rising interest rates are having an effect and that is clearly indicated by the halt in price growth.

For the nine census divisions, the price fluctuation in January ranged from a drop of 2% monthly in the East South Central division to an increase of 0.6% in the Pacific division. Annually, however, all changes were positive from an increase of 3.5% in the East South Central division to an increase of 8.3% in the Mountain division.

U.S. Existing Home Sales in February declined by 3.7% to a seasonally adjusted annual rate of 5.48M units – I had forecast a drop to 5.54M units.

Existing sales

The median existing home price for all housing types increased 7.7% year-over-year to $228,400, which marked the 60th consecutive month of year-over-year gains and the fastest increase since last January.

The median existing single-family home price rose 7.6% to $229,900. Single-family home sales fell 3.0% to a seasonally adjusted annual rate of 4.89 million.

Total housing inventory at the end of February increased 4.2% to 1.75 million existing homes for sale, yet that was 6.4% lower than the same period a year ago.

The key takeaway from the report is that limited supply and weakening affordability conditions are preventing more robust selling activity in the market for existing homes.

U.S. New Home Sales rose to an annual rate of 598,000 units in February – better than my forecast for a rise to 560,000 units and at a level last seen in July of 2016.

New sales

The strength in February was paced by a huge 30.9% increase in new home sales in the Midwest. While some might point to favorable weather as the driver there, bear in mind that the Existing Home Sales Report for February did not corroborate that view indisputably as existing home sales in the Midwest fell 7.0% in February.

The Northeast was a notable pocket of weakness. New home sales there declined 21.4% from January, with the February blizzard likely playing a part in the drop.

The median sales price declined 4.9% year-over-year to $296,200 while the average sales price increased 11.7% to $390,400.  Moreover, new homes priced at $299,999 or less accounted for 52% of new homes sold in February versus 46% in January.

What to Watch for This Week

Case Shiller Index data for January should show U.S. home prices up by 5.6% – matching the annual rise seen in December.

Consumer Confidence in March is likely to pull back to 113.3 from the February level of 114.8.

The NAR Pending Home Sales Index in February should show a turnaround from the 2.7% contraction seen in January.

The third and final take on U.S. GDP in the final quarter of last year will likely show a very modest increase to the previously reported number of 1.9%. I anticipate it to have risen to a growth rate of 2.0%.

U.S. Income & Spending data in February should show incomes up by 0.4% (matching the January growth rate) and spending up by 0.2% (again matching the prior month).

The final Consumer Sentiment number for March should remain at the preliminary reported figure of 97.6.