Home prices rise. Home affordability declining. Consumer Confidence strong

Home prices rose steadily across the nation in May though affordability issues may come into play in the months ahead. The S&P CoreLogic Case-Shiller 20-City Home Price Index rose 6.5% from May 2017 to May 2018. This was in line with expectations and just below the 6.7% recorded in April (revised from 6.6 percent). On a monthly basis, home prices were up 0.7% from April to May.
David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices says, “Home prices continue to rack up gains two to three times greater than the inflation rate.” In addition, “Affordability – a measure based on income, mortgage rates and home prices – has gotten consistently worse over the last 18 months. All these indicators suggest that the combination of rising home prices and rising mortgage rates are beginning to affect the housing market.”
Consumer Confidence rose in July to its second highest level in 2018 with consumers feeling that economic growth is still strong. The Consumer Confidence Index rose to 127.4 in July, above 127.1 in June. Within the report it showed that those stating business conditions are “good” increased, while those saying business conditions are “bad” declined. Consumers’ assessments of the labor market were also more favorable. Those claiming jobs are “plentiful” increased, while those claiming jobs are “hard to get” were virtually unchanged.