Tuesday, August 30, 2022
The retrospective – but much appreciated for its precision – Case-Shiller Home Price Index continued to decline in June this year: +18.0% year-on-year is still high, but especially compared to the upward-revised +19.9% in May. Keep in mind that these numbers still only reflect the Fed’s first interest rate hikes, which quickly made their way to 30-year mortgage rates. This sub-20% home price growth may only reflect the first of (so far) two consecutive readings of 75 basis points.
This number of titles is the average of the 10-City survey (+17.4% against +19.1% in May, year-on-year) and 20-City (+18.6% against +20.5% from previous reading). On a month-to-month basis, home sales in June were up +0.4% overall, less than half of the +1.0% expected. This is further evidence that the housing market has taken a serious turn, although we admittedly hit huge highs in early 2022 (an all-time high of +21.2% in 20 years in April). Still, as home ownership accounts for up to 1/3 of total GDP, this is good news for lowering inflation overall.
That said, we’re still seeing monstrous gains in some parts of the country, especially low-tax Southern states (allowing higher house prices). Florida and Texas continued to demonstrate their dominance in real estate spending: Tampa was +35% year over year, Miami +33.0% and Dallas +28.2%. Of the remaining cities, only New York and Chicago closed higher month-over-month. This continues the narrative from the housing slide: recent major cities like Seattle, Phoenix, and San Diego are perhaps demonstrably off their peak levels.
After today’s opening bell, we also receive some key economic indicators: the Consumer Confidence Index for August is expected to improve to 97.4 from 95.7 last time, while Job Vacancies and Labor Turnover Survey (JOLTS) for July is expected to see 10.3 million opens, up from 10.7 million the previous reading. For June figures, job abandonments fell slightly to 4.2 million.
This will only be the first salvo of employment data to be released this week: tomorrow morning will bring us the private sector payroll survey of Automatic data processing (ADP – Free report) and Friday is the big non-farm payrolls report from the US Bureau of Labor Statistics (BLS). ADP took most of the summer; the last headline we got was 128,000 new private sector jobs in May – by far the lowest reading of the year. Expectations are around 300K in this morning’s reading. The BLS numbers should come in somewhere just north of 300K – still good, given the prolonged strength of the post-Covid labor market.
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