Solid Residential Reports Come Amid Uncertainty
- Aug 26, 2015
While the stock market went on its merry way on Tuesday (up and then down), a fair amount of housing data also came out, mostly positive metrics. For instance, according to the Census Bureau and HUD, sales of new single-family houses in July 2015 were at an annualized rate of 507,000 units. That’s an improvement compared with the month before, up 5.4 percent, but more importantly, the gain since July 2014 is 25.8 percent. The report also marks the seventh month in a row of substantial annual gains, so the momentum in housing might finally be there for a more sustained recovery. Historically, new home sales have been low since the recession.
Residential prices also seem to have some momentum—but not the bubble kind of momentum. Prices are exhibiting a steady increase over time. The S&P/Case-Shiller U.S. National Home Price Index, which was also released on Tuesday, recorded a year-over-year gain of 4.5 percent in June, compared with a 4.4 percent increase in May. Case-Shiller’s 10-City Composite had marginally lower year-over-year gains, with an increase of 4.6 percent, and its 20-City Composite year-over-year pace was virtually unchanged from last month, rising 5 percent year-over-year.
Both new housing sales and home prices have exhibited this kind of positive growth for the entire year so far. A steady rise in new home sales is a positive for both the wider economy and parts of the commercial side of the industry, especially retailers but also warehouse/distribution centers. A steady rise in home prices has a more subtle effect: as households regain the equity in their homes, they’re more likely to buy other things, as a function of the wealth effect.
Another good bit of data on Tuesday: consumer confidence is up, according to Conference Board. Its Consumer Confidence Index, which had declined sharply in July, rebounded in August. The Index now stands at 101.5 (1985 = 100), up from 91.0 in July. The survey was done before the financial troubles of late August, but even so it seems like the recovery in the labor market is finally having an impact on consumer attitudes. The tumult in the stock might drive consumer confidence down again, especially if the crisis lasts more than a few days. But for now, the data is positive. Happy consumers spend more money, which helps keep retail and industrial landlords happy.