Latest news with #CaseShiller
Yahoo
28-06-2025
- Business
- Yahoo
Falling home prices are raising the risk of a deeper correction as the housing market cracks under high mortgage rates
Recent housing market indicators show persistent weakness in home prices, including consecutive month-over-month declines. That's as housing supply has increased while demand has stayed tepid amid still-high mortgage rates hovering around 7%. The slump in prices raises the risk of a prolonged downturn, according to Capital Economics. The housing market has largely been frozen since mortgage rates shot up a few years ago, but recent indicators have pointed to the possibility of an extended slump in prices. The latest Case-Shiller home price report showed a 0.3% monthly fall in the 20-city index in April, steeper than March's downwardly revised 0.2% dip. In a note on Tuesday, Thomas Ryan, North America economist at Capital Economics, warned that the back-to-back declines could signal a 'deeper correction' ahead. 'After falling in March, the further 0.3% m/m decline in house prices in April raises the risk that prices are entering a sustained downturn, as the market finally buckles under the weight of near-7% mortgage rates,' he added. On a three-month annualized basis, house prices fell by 0.4%, Ryan noted. And while prices are up on a year-over-year basis, it's still the slowest pace since August 2023 The Case-Shiller data isn't the only red flag, as the FHFA price index showed a 0.4% monthly drop. 'Clearly, the existing homes market is losing momentum as demand remains anemic due to sky-high borrowing costs, while more people put their home up for sale, forcing sellers to adjust their price expectations,' Ryan wrote. Previous data also line up with a downtrend. The median sale price of an existing home has dropped for five consecutive months on a seasonally adjusted basis. That's as the number of homes available for sale is back around pre-pandemic levels. To be sure, lower prices also make homes more attractive, potentially spurring more demand and representing some relief for younger Americans who are looking to buy but have been priced out of the market. But economists at Citi Research flagged ongoing headwinds, attributing the price declines to high mortgage rates, elevated uncertainty, softening consumer demand, and a weakening labor market. In addition, slowing activity in the housing sector overall is an early sign that underlying demand is weakening this year, Citi said in recent note. 'While prices could still fluctuate month-to-month, consistent softening in median sale prices suggests the trend is likely to continue in more stable measures of new home prices like the Case Shiller index,' economists predicted. Capital Economics said there are still some reasons to believe a prolonged downturn can be avoided. Ryan pointed out at that supply remains relatively tight overall, despite some expansion lately. Meanwhile, the mortgage market is also healthy, reinforced by more than a decade of stricter lending standards instituted after the Great Financial Crash. Plus, continued resilience in the labor market should prevent forced selling in the housing market, he added. 'All that being said, the weakness of the recent price data mean that we have to start taking the prospect of an extended period of house price declines more seriously, which is something we will be considering for our upcoming US Housing Outlook,' Ryan said. This story was originally featured on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
28-06-2025
- Business
- Yahoo
Falling home prices are raising the risk of a deeper correction as the housing market cracks under high mortgage rates
Recent housing market indicators show persistent weakness in home prices, including consecutive month-over-month declines. That's as housing supply has increased while demand has stayed tepid amid still-high mortgage rates hovering around 7%. The slump in prices raises the risk of a prolonged downturn, according to Capital Economics. The housing market has largely been frozen since mortgage rates shot up a few years ago, but recent indicators have pointed to the possibility of an extended slump in prices. The latest Case-Shiller home price report showed a 0.3% monthly fall in the 20-city index in April, steeper than March's downwardly revised 0.2% dip. In a note on Tuesday, Thomas Ryan, North America economist at Capital Economics, warned that the back-to-back declines could signal a 'deeper correction' ahead. 'After falling in March, the further 0.3% m/m decline in house prices in April raises the risk that prices are entering a sustained downturn, as the market finally buckles under the weight of near-7% mortgage rates,' he added. On a three-month annualized basis, house prices fell by 0.4%, Ryan noted. And while prices are up on a year-over-year basis, it's still the slowest pace since August 2023 The Case-Shiller data isn't the only red flag, as the FHFA price index showed a 0.4% monthly drop. 'Clearly, the existing homes market is losing momentum as demand remains anemic due to sky-high borrowing costs, while more people put their home up for sale, forcing sellers to adjust their price expectations,' Ryan wrote. Previous data also line up with a downtrend. The median sale price of an existing home has dropped for five consecutive months on a seasonally adjusted basis. That's as the number of homes available for sale is back around pre-pandemic levels. To be sure, lower prices also make homes more attractive, potentially spurring more demand and representing some relief for younger Americans who are looking to buy but have been priced out of the market. But economists at Citi Research flagged ongoing headwinds, attributing the price declines to high mortgage rates, elevated uncertainty, softening consumer demand, and a weakening labor market. In addition, slowing activity in the housing sector overall is an early sign that underlying demand is weakening this year, Citi said in recent note. 'While prices could still fluctuate month-to-month, consistent softening in median sale prices suggests the trend is likely to continue in more stable measures of new home prices like the Case Shiller index,' economists predicted. Capital Economics said there are still some reasons to believe a prolonged downturn can be avoided. Ryan pointed out at that supply remains relatively tight overall, despite some expansion lately. Meanwhile, the mortgage market is also healthy, reinforced by more than a decade of stricter lending standards instituted after the Great Financial Crash. Plus, continued resilience in the labor market should prevent forced selling in the housing market, he added. 'All that being said, the weakness of the recent price data mean that we have to start taking the prospect of an extended period of house price declines more seriously, which is something we will be considering for our upcoming US Housing Outlook,' Ryan said. This story was originally featured on
Wall Street Journal
24-06-2025
- Business
- Wall Street Journal
U.S. Home Prices Cool to Near-Two-Year Low
U.S. home prices rose at the slowest annual pace in nearly two years as mortgage prices continued to stretch affordability. The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the country, rose 2.7% in the 12 months to April, the slowest on-year appreciation since mid-2023 and cooling from 3.4% in March, data released Tuesday showed.
Japan Times
30-05-2025
- Business
- Japan Times
The next great job churn is already starting
The geography of employment in the U.S. is being shaped by two distinct trends. The first is low levels of housing churn and, therefore, interstate migration, a normal part of the business cycle that should eventually turn around. More consequential are signs that artificial intelligence is beginning to suppress hiring in some of the most technology-centric parts of the country such as the San Francisco Bay Area — a shift that may portend a structural change in the labor market. This is a useful time to look at changes in employment growth in different parts of the country and compare these with the pre-pandemic economy, since overall job growth is currently only a touch lower than it was in 2019. U.S. employment grew 1.2% in April from a year earlier, close to the 1.3% growth seen in 2019. Let's start with the reduced migration from cold states to warm states that is showing up in the employment data of the metros most affected. House prices are a useful proxy for interstate migration. The two large metros with the weakest home price growth are Dallas, Texas, and Tampa, Florida, according to the S&P CoreLogic Case-Shiller indices. Employment in Dallas grew 1.4% in March from a year earlier, roughly half its 2019 pace, while in Tampa, it grew just 0.9%, a third of its 2019 pace. Reduced outmigration from the Northeast and Midwest, on the other hand, helps explain why job growth is above the pre-pandemic pace in Buffalo, New York and Pittsburgh, Pennsylvania. In theory, less interstate migration should also boost the fortunes of the San Francisco Bay Area, a region famous for people leaving to get away from high housing costs. Yet employment in the region has been declining since its post-pandemic peak in November 2022 — coincidentally, the month OpenAI's ChatGPT launched. This could be chalked up to tech companies laying off workers in 2023 and early 2024 to preserve profitability after a hiring binge in the years previous. Meta Platforms's headcount fell by 22% on a year-over-year basis in its "year of efficiency' push in 2023. But that post-COVID-19 culling is behind us — big tech companies are collectively investing hundreds of billions of dollars into AI, and Meta's headcount has grown 10% over the past year. So, it's noteworthy that employment in the country's tech heartland continues to decline at a time when, in theory, the Bay Area has the tailwinds of massive investment and fewer people leaving the region. The most likely culprit is the impact that AI is having on labor demand. The types of white-collar jobs shrinking the fastest in the U.S. include categories such as software engineers, data engineers and application engineers. On recruitment site Indeed, job postings for software engineers are currently lower than they were in the spring of 2020. Some of this drop is likely due to efficiency gains from AI, while some may be due to companies needing to control headcount where they can while they pile huge sums of money into advanced chips and data centers. Boston is another knowledge job-centric metro area showing signs of labor market softness, with its unemployment rate rising from 3.5% to 4.5% over the past year, the highest level outside of the pandemic period since 2015. The education hub may be more vulnerable than some other cities to AI adoption since the technology tends to be good at the kind of work that would typically be offered to young college graduates. These are dynamics we should expect to see, according to "From San Francisco to Savannah? The Downstream Effects of Generative AI,' a paper by researchers at Louisiana State University and Massachusetts Institute of Technology. Metro areas with both high educational attainment and high costs of living are the most vulnerable to AI disruption. These metros have many of the kinds of jobs AI can replace and cuts there help reduce headcount expenses more quickly. Authors Scott Abrahams and Frank S. Levy highlight parallels with the 1980s when manufacturing-centric communities with a low share of educational attainment were hit hardest by the negative shock of automation and globalization. This doesn't mean that San Francisco will turn into a technological Rust Belt — the region is at the forefront of AI innovation, after all, and even if it ends up with fewer software development jobs, those could be replaced by different kinds of AI-enhanced knowledge work. Abrahams and Levy point out that the manufacturing shock benefited the southern U.S., not just Asian exporting countries, and it's possible an AI shock will lead to more balanced economic development across the U.S. That may take time, though, particularly while interstate migration remains constrained by a dysfunctional housing market. Given our experience with manufacturing job losses and signs that another labor-market reordering is coming, it's time policymakers at the local and national level start to take the potential for AI disruption seriously. Conor Sen is a Bloomberg Opinion columnist.
