Pending Home Sales and Home Prices Rise

There were updates on Pending Home Sales, home price appreciation and unemployment claims during an otherwise quiet week where the markets were closed on Wednesday for New Year’s Day. Read on for these headlines and more:

·      Pending Home Sales Rise for Fourth Straight Month

·      Another Record High for Home Prices

·      Unemployment Filings Likely Skewed by Holidays

Pending Home Sales Rise for Fourth Straight Month

Pending Home Sales, which are signed contracts on existing homes, rose 2.2% from October to November per the National Association of REALTORS® (NAR). The index reached its highest level since February 2023 as sales were also 6.9% higher than they were a year earlier.

What’s the bottom line? NAR’s Chief Economist, Lawrence Yun, noted that “consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory.”

Yun added that, “Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”

Another Record High for Home Prices

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices nationwide rose 0.3% from September to October after seasonal adjustment, breaking the previous month’s all-time high. Home values in October were also 3.6% higher than a year earlier, following a 3.9% gain in September.

Case-Shiller’s 10-city (+4.8% YoY) and 20-city (+4.2% YoY) indices reported even higher growth than the nationwide figures, showing that big cities are outperforming the rest of the nation.

The Federal Housing Finance Agency’s (FHFA) House Price Index also showed that home prices rose a seasonally adjusted 0.4% from September to October, and they were 4.5% higher when compared to the same time last year. FHFA’s Index differs from Case-Shiller’s because it does not include cash buyers or jumbo loans, only loans financed with conforming mortgages.

What’s the bottom line? Home prices are continuing to appreciate and though the pace has been moderating, homeownership continues to provide a significant wealth creation opportunity.

In fact, S&P DJI’s Head of Commodities, Brian D. Luke, noted that Case-Shiller’s National Index “hit its seventeenth consecutive all-time high” while Dr. Anju Vajja, Deputy Director at FHFA, explained that “home prices continued to grow at a steady rate.”  

Unemployment Filings Likely Skewed by Holidays

Initial Jobless Claims fell by 9,000 in the latest week, with 211,000 people filing for unemployment benefits for the first time. Continuing Claims also dropped by 52,000, as 1.844 million people are still receiving benefits after filing their initial claim.

What’s the bottom line? While Initial Jobless Claims fell to their lowest level since April, the measured week included Christmas, and this could have impacted the data as people often put off filing if they’re traveling or busy during the holidays.

Continuing Claims measured the prior week just before Christmas, so they may have been less impacted by the holiday. However, they have now topped 1.8 million since the start of June, which is 30 consecutive weeks. This elevated number suggests people are collecting benefits for longer periods of time as new job opportunities have become harder to find.