The Bureau of Labor Statistics reported a Q2 GDP estimate of 4.6% last week, which seems to indicate a definite long-term economic recovery, but the faltering housing market indicates that our economic health is still precarious. Homes.com recently released their local market index and revealed that 15 fewer housing markets registered an increase in their three-month averages. It is expected that the national housing market will continue its slide.
Only 166 of the nation’s mid-sized housing markets reported an increased three-month average, which is 20% fewer than had been expected. of the top 300 American housing markets, only 109, or 36%, have reached a full home price recovery. When comparing this year’s growth to the three-month averages and market gains of Q2 2013, it is clear that the housing market is slowing down. 2013’s gains of 2.5-3% have tumbled, with modest gains of .5% reported for Q2 2014.
The Standard & Poor Case-Shiller National Home Price Index issued last week confirmed that a housing market slide is immanent. Nationally, single-family home prices for July 2014 gained 5.6% over July 2013, a drop of .14% from the June 2014 rates. 19 of the 20 cities Case-Shiller tracks posted lower annual gains for July. As double-digit price increases had become the norm from 2013-2014, this percentage decrease is unexpected and unwelcome news.
The jump of 18% in new home sales for August 2014 is actually an aberration in the current trend, according to S&P Chairman of the Index Committee David M. Blitzer. Blitzer explains that, “However, home prices continue to rise at two to three times the rate of inflation. The slower pace of home price appreciation is consistent with most of the other housing data on housing starts and home sales. The rise in August new home sales–which are not covered by the S&P/Case-Shiller indices–is a welcome exception to recent trends.” Sales of existing homes dropped 1.8% in August, during which time pending sales also dropped 1%.