Houses Got Pricier Again in February

What Tuesday’s Economic Reports Tell Us

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Home prices continued to rise in February, while sales of newly built homes fell for a third month in March, reports showed Tuesday.

Here’s a quick look at the most significant economic indicators of the day and what they tell us.

S&P CoreLogic Case-Shiller Home Price Index

  • Home prices were 19.8% higher this February than last February, according to the S&P CoreLogic Case-Shiller Home Price Index. This is the third-fastest growth for a 12-month period on record, just shy of the pace seen in July and August of last year. 
  • Home prices have soared during the pandemic, with growth decelerating only slightly late last year before accelerating again in January and February. But could this be a last hurrah? Interest rates for mortgages surged in March and April, and that has made homebuying less appealing. That could soon put the brakes on those price increases, said Craig J. Lazzara, managing director at S&P Dow Jones Indices, in a commentary.

Durable Goods Orders

  • Manufacturers other than aircraft makers had a good month in March as orders for most kinds of durable goods (things like cars, computers, and machinery) increased, bouncing back after a dip in February.
  • A Census Bureau report showed that supply chain problems may be improving and that businesses are investing in lots of equipment, a good sign for the health of the economy, economists said. A dip in both civilian and military aircraft orders wasn’t too worrisome, since those categories are prone to big up-and-down swings in any given month, they said.

New Home Sales 

  • Sales of newly built homes fell for a third consecutive month in March, the Census Bureau said. New homes sold at a seasonally adjusted annual rate of 763,000, an 8.6% drop from February, and below the 770,000 economists had forecast. However, the report also showed sales in February and January were higher than previously reported. 
  • Sales may have slowed, but prices didn’t: The median price for a newly built home rose to $436,700, while the average price hit $523,900, both record highs. 
  • “We expect new home sales to lose more momentum as we move further into 2022,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said in a commentary. “Demand may remain strong, but high home prices and the spike in mortgage rates since the end of 2021—which have increased by a record amount in a compressed period of time—will price some buyers out of the market.”

Conference Board’s Consumer Confidence

  • Consumers felt a little worse about the economy and their own finances in April after a small improvement in March, the Conference Board’s Consumer Confidence Index showed.
  • Although people who answered the survey were more pessimistic about the present, they were more optimistic about the future. Not surprisingly, then, the overall index only fell a little. Consumers didn’t quite know what to make of mixed signals, economists said—on the downside, rampant inflation, but on the upside, an extremely favorable job market.

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  1. S&P Dow Jones Indices. “S&P CoreLogic Case-Shiller Index Shows Annual Home Price Gains Increased to 19.8% in February.”

  2. U.S. Census Bureau. “Monthly Advance Report on Durable Goods Manufacturers’ Shipments, Inventories, and Orders March 2022.”

  3. U.S. Census Bureau. “Monthly New Residential Sales, February 2022.”

  4. The Conference Board. “US Consumer Confidence.”

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