United States: Home price growth steady in July
September 26, 2017
Home price growth was healthy in July, buttressed by still-robust employment growth and a low supply of both new and existing homes. The S&P/Case-Shiller 20-city composite home price index rose 0.7% in July, mirroring June’s figure. When adjusted for seasonal factors, home prices grew a smaller 0.3% from the previous month, slightly above June’s 0.1% month-on-month increase and in line with market expectations.
On a yearly basis, home price growth in July came in at 5.8%, which was above June’s 5.7% increase and marked the highest reading in four months. Seattle, Portland and Las Vegas recorded the largest increases in house prices of the 20 cities in the index, while Chicago and Washington logged the softest annual price rises.
House prices remain a key source of growth in household wealth along stock prices and wages. As such, sustained momentum in housing prices in July points to healthy private consumption at the outset of the third quarter. David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, warns of two contradictory challenges the housing market will be facing down the road:
“First, rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures. Second, the Fed’s recent move to shrink its balance sheet could push mortgage rates upward.”
Author: David Ampudia, Economist