Existing Home Prices Showing Life

Prices of existing homes showed a lot of life in October, up 0.9 percent for Case-Shiller's 20-city adjusted index which is at the high end of the Econoday consensus. Year-on-year, prices were up 5.5 percent for a second month.

San Francisco, Denver and Portland continue to report the highest year-over-year gains among the 20 cities with another month of double-digit price increases of 10.9 percent for all three. Twelve cities reported greater price increases in the year ending October 2015 versus the year ending September 2015. Phoenix had the longest streak of year-over-year increases, reporting a gain of 5.7 percent in October 2015, the eleventh consecutive increase in annual price gains.

Generally good economic conditions continue to support gains in home prices. Among the positive factors are consumers' expectations of low inflation and further economic growth as well as recent increases in residential construction including single family housing starts. Inventories of existing homes have averaged around a five month supply for the past year, a level that suggests a fairly tight market with limited supplies. Sales of new single family homes, despite recent increases in construction, remain mixed to soft compared to the trend in existing home sales.

Recent History Of This Indicator:
Prices of existing homes appear to be picking up a little steam, mostly the result of low supply as sales have been flat. The Econoday forecast is calling for a strong 0.6 percent gain for the Case-Shiller adjusted 20-city index with the year-on-year rate pegged at plus 5.4 percent. Note that the high estimate for the year-on-year rate, at 6.3 percent, would more than match FHFA's 6.1 percent rate released in the prior week.