The only important economic data released this morning was the Federal Housing Finance Agency’s (FHFA’s) national home price index (HPI), which rose by 0.5 percent in November (lagged). That was in line with economists’ expectations and the 58th monthly increase in a row. On a year-over-year basis, home prices grew by just 6.1 percent in November, the slowest pace of annual growth since July but still well above current measures of wage growth and headline inflation. Moreover, some economists like to compare the HPI to the owners' equivalent rent section of the monthly consumer price index (CPI) report from the U.S. Bureau of Labor Statistics to help spot price bubbles. As the second chart below shows, home values have increased significantly in recent years but remain below the extremes seen prior to the last recession. Going forward, the housing market faces several headwinds but inventories remain low, which means that home prices are likely not going to start falling sharply any time soon. This environment is bad for first-time buyers but apparently appealing to housing market investors (flippers).
Sources: Econoday, U.S. FHFA, U.S. DoL, FRBSLPost author: Charles Couch