Home Prices Continue to Grow at a Rapid Pace

Laura Kusisto reported yesterday at The Wall Street Journal Online that, “Home prices continued to grow at a rapid pace in the first month of 2018, as a new tax law and rising mortgage rates made little dent in demand in the early weeks of the year.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures the price of a typical single-family home in major metropolitan areas across the country, rose 6.2% in January, down slightly from a 6.3% year-over-year increase reported in December.

“The 10-city index gained 6% over the year, unchanged from the prior month. The 20-city index gained 6.4%, up slightly from 6.3% the previous month.”

The Journal article noted, “Home prices are continuing to grow about twice as fast as incomes, despite a strengthening economy, which is making it difficult for millennials to break into the market and buy their first homes. Average hourly earning for private sector workers rose just 2.6% in the year ended in February, according to the Labor Department.

“‘Home prices are racing ahead of worker earnings and this will prove to unsustainable over the longer run, and we are keeping our fingers crossed this latest bubble in housing prices won’t end with a bang again like it did over a decade ago,’ said Chris Rupkey, chief financial economist at MUFG Union Bank. Mr. Rupkey noted that prices were rising in the mid-double digits in the mid-2000s before the bubble burst so the gains appear to be more sustainable today.”
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