The Week Ahead: A Look at the Rising Prices

On Tuesday, S&P Indices, along with CoreLogic, will release the February S&P Corelogic Case-Shiller Home Price Index (HPI), a monthly measure of changes in the housing market.

The S&P Corelogic Case-Shiller HPI covers 20 metropolitan areas across the U.S., and is released on the last Tuesday of every month. The previous HPI, covering January 2017, showed home prices at a 31-month high.

During January, home prices were up 5.9 percent year-over-year and 5.7 percent month-over-month.

After January’s results were released, David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Down Jones Indices, stated that the uptick in home prices shouldn’t sound off alarm bells just yet.

“Housing and home prices continue on a generally positive upward trend,” Blitzer said. “The recent action by the Federal Reserve raising the target for the Fed funds rate by a quarter percentage point is expected to add less than a quarter percentage point to mortgage rates in the near future. Given the market’s current strength and the economy, the small increase in interest rates isn’t expected to dampen home buying. If we see three or four additional increases this year, rising mortgage rates could become concern.”

The upcoming indices may reveal rates continuing to rise, but even with the rate hike, housing should remain affordable for many middle-income buyers. According to Mark Fleming, Chief Economist at First American Financial Corporation, said there shouldn’t be a problem.

“Even at the higher mortgage rate, for the majority of markets a median income can purchase more than the median priced house,” Fleming said. “Why is this? The house buying power that borrowers have, even with rates below five percent, still remains historically strong. It would take a significantly higher mortgage rate to erode the real, house-buying power adjusted, price of housing, even as nominally house prices grow at their current pace.”

To view the full Index, visit us.SPIndices.com.

This Week’s Schedule

FHFA Home Price Index, Tuesday, 9 a.m. EST

MBA Mortgage Applications, Wednesday, 7 a.m. EST

FSC to Hold Financial CHOICE Hearing, Wednesday, 10 a.m. EST

Freddie Mac Weekly Mortgage Survey, Thursday, 10 a.m. EST