Economy Watch: More Evidence That Home Prices Rising More Slowly

By Dees Stribling, Contributing Editor

CoreLogic reported on Tuesday that home prices, including distressed sales, increased 7.4 percent in July 2014 compared with the same month a year earlier. That represents 29 months of consecutive year-over-year increases in home prices nationally, according to the company, but also a slowing down of the rate of increase—as has been the case with other home-price metrics. On a month-over-month basis, home prices increased 1.2 percent in July compared to June, including distressed sales.

At the state level, only Arkansas posted a decline in July 2014, seeing a 0.9 percent drop for the month. A total of 11 states, plus the District of Columbia, reached new highs by CoreLogic’s reckoning (its index dates back to January 1976). Those states include Alaska, Colorado, Iowa, Louisiana, Nebraska, North Dakota, Oklahoma, South Dakota, Tennessee, Texas and Vermont.

“While home prices have clearly moderated nationwide since the spring, the geographic drivers of price increases are shifting,” Sam Khater, deputy chief economist for CoreLogic, notes. “Entering this year, price increases were led by Western and Southern states, but over the last few months Northeastern and Midwestern states are migrating to the forefront of home-price rankings.”

Construction spending up in July

The Census Bureau said on Tuesday that U.S. construction spending during July 2014 came in at an annualized rate of $981.3 billion, an increase of 1.8 percent above June, with both private and public spending growing. The July 2014 figure is 8.2 percent above the July 2013 annualized rate of $906.6 billion.

Spending on all private construction was at an annualized rate of $701.7 billion in July, 1.4 percent above the revised June. Residential construction was up too, increasing 0.7 percent month-over-month, and nonresidential construction came in 2.1 percent higher in July than June.

Spending on new single-family houses was up 0.5 percent for the month, while multifamily spending edged up 0.2 percent (though befitting multifamily’s volatility, spending on that property type was up 41 percent since last year). Other categories of construction spending that enjoyed month-over-month increases in July were lodging (up 2.8 percent), health care (up 2.1 percent), and manufacturing facilities (up 4.4 percent). Spending on offices, educational facilities, religious buildings and recreational properties were all down for the month.

ISM reports strong PMI for August

The Institute for Supply Management reported on Tuesday in its ISM Report on Business that its August PMI registered 59 percent, an increase of 1.9 percentage points from July, indicating continued expansion in manufacturing. In was a strong report, since that’s the highest reading for the index since March 2011; much of the increase was spurred by the highest New Orders Index since April 2004.

Wall Street ended Tuesday mixed, with the Dow Jones Industrial Average off 30.89 points, or 0.18 percent, and the S&P 500 down a slight 0.05 percent. The Nasdaq saw a gain of 0.39 percent.