House prices in the United States remained flat in January, the first time in more than three years that they have not climbed, according to the Federal Housing Finance Agency monthly House Price Index Friday.
As well, new US single-family home sales jumped to a seven-month high in February, suggesting the housing market recovery was gaining momentum despite higher prices and rising mortgage rates, said the US Commerce Department also Friday.
US New Home Prices, House Sales: January and February 2017
US HOUSE PRICE INDEX
The latest Federal Housing Finance Agency monthly House Price Index, released Friday, has shown positive monthly increases since early 2012, except for November 2013 and January 2017, when house prices were flat on a month- over-month basis. The index was up 0.4 per cent in December and 0.6 per cent in November.
From January 2016 to January 2017, however, house prices were up 5.7 per cent.
Monthly price changes in January ranged from -2.0 per cent in the East South Central division to +0.6 per cent in both the Pacific and Mountain regions.
The 12-month changes were all positive in the nine different regions that the index tracks. The biggest jumps for the 12-month period ended January 31, 2017 were the Mountain and Pacific regions, which were up 8.3 per cent and 7.7 per cent respectively. The smallest gains were in the East South Central and New England regions, which were up 3.5 per cent.
The index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.
The next House Price Index report will be released April 25, 2017 and will include monthly data through February 2017.
US NEW HOME SALES
New US single-family home sales jumped to a seven-month high in February, suggesting the housing market recovery was gaining momentum despite higher prices and rising mortgage rates.
“New home sales are the secret sauce that helps make the economy grow,” said Chris Rupkey, chief economist at MUFG Union Bank in New York. “This will put some backbone in investment spending and make this economic expansion more sustainable.”
The Commerce Department said new home sales increased 6.1 per cent to a seasonally adjusted annual rate of 592,000 units last month, the highest level since July 2016. Sales have now more than recouped the sharp drop suffered in December.
Last month’s new home sales were likely partially buoyed by unseasonably warm weather. Most economists see a limited impact on housing from higher mortgage rates because a tightening labour market is improving job opportunities for young adults.
SHORTAGE OF PROPERTIES FOR SALE
The market for new houses is benefitting from a shortage of properties for sale. A report on Wednesday showed a 3.7 per cent drop in sales of existing homes in February.
Last month, new single-family homes sales surged 30.9 per cent to their highest level since November 2007 in the Midwest and increased 3.6 per cent in the South. They jumped 7.5 per cent in the West but slumped 21.4 per cent in the Northeast.
The inventory of new homes on the market increased 1.5 per cent to 266,000 units last month, still less than half of its peak during the housing boom in 2006.
At February’s sales pace it would take 5.4 months to clear the supply of houses on the market, down from 5.6 months in January. A six-month supply is viewed as a healthy balance between supply and demand.