Inventory Is The Key To The Housing Market

Summary

• Home prices are rising at 6.15% year over year on a national level.
• The rate of acceleration in home prices is increasing.
• The residential real estate market is holding up better than any other segment of the economy.
• Inventory is the key piece to the residential real estate market.

Overview

This week is filled with important housing and real estate related economic data points including New Home Sales (Yesterday), Home Prices (Today), and Pending Home Sales (Tomorrow).

I published a [Daily Data Flash] on New Home Sales yesterday to members of EPB Macro Research. Click here for access to that report.

The report on New Home Sales was strong showing an increase of over 19% compared to last year. Also, the growth rate in the Median price of New Home Sales has stabilized at 3.30% year over year. The growth rate in the median sales price of new homes was trending lower at a fairly sharp pace for the better part of two years. The recent handful of months has stopped that decline for the time being.

New Home Sales Year over Year Growth & Median Price Year over Year Growth:

Source: Census Bureau

The S&P CoreLogic Case-Shiller Home Price Indices, released today, are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions. This report covers the price trends in homes that are not newly built but rather existing. The Case-Shiller report is the most popular report on the price of existing homes.

Case-Shiller Home Price Index

The National price index rose 6.15% vs. last year. This is faster growth than 5.95% last month and 5.15% last year.

National Home Price Index Year over Year Growth: Source: S&P, Dow Jones

The chart below shows a shorter time horizon of the national home price index which clearly shows a housing market in which prices are continuing to accelerate.

National Home Price Growth:

Source: S&P, Dow Jones

More importantly, home prices are increasing at an accelerating pace. This 'rate of change' shows that

Analyst’s Disclosure: I am/we are long TLT, IEF, SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.