Home Prices Up Slightly Less Than Expected

Date: December 30, 2015

October Case-Shiller Index Up 5.5% Due To Limited Inventories

The latest Standard & Poors/Case-Shiller 20 city home value index shows that in October, home prices rose 5.5 percent on an annual basis, up from 5.4 percent in September, as growing demand and limited inventories pushed prices higher. Bloomberg News reported economists had forecast prices would rise 5.6 percent. While the “limited supply of properties for sale has helped prop up home values,” lower income and first time buyers will need “faster wage growth and continued low borrowing costs” to find their place in the market “and provide the next leg of growth in the housing recovery,” analysts projected. The AP reported that home values “have climbed at a roughly 5 percent pace during much of 2015, as strong hiring has bolstered a real estate market still recovering from a housing bust that triggered a recession eight years ago.” The Wall Street Journal reported that commenting on the index, S&P Dow Jones Indices managing director David Blitzer said, “There is a little bit of momentum. It is generally a growing economy and job creation has been strong. You get people who want to buy houses.” CNBC reported, “Very low inventories of homes for sale, however, are the main driver of higher prices right now.” Peter Boockvar, managing director at the Lindsey Group, said, “Monetary policy in the mid-2000s certainly pulled forward a lot of sales. We can only wonder the amount of economic and market activity we’ve pulled forward over the last five years.”

What This Means For Small Businesses

The housing market has been slower to recover from the recession. Heading into 2016, small businesses in construction and housing, in particular, may continue to see uneven growth. As NFIB Chief Economist William Dunkelberg pointed out in the latest Small Business Economic Trends report, “With weak expectations for sales and business conditions, prospects for strong inventory investment are poor.”

Additional Reading

Fox Business also covered the latest data from the Case-Shiller Index.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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