The Gold Standard for home price appreciation - The Case-Shiller Home Price Index - showed a rise in June of about 0.6% and 18% year-over-year. This annual reading is a decline from the 19.9% gain reported in May but still very strong.
Although the Case-Shiller Index is the standard for home appreciation, a more accurate representation of the average American's appreciation is the Federal Housing Finance Agency's (FHFA) House Price Index. The reason being, the House Price Index measures appreciation for single-family homes with conforming loan amounts (up to $647,200). According to this Index, home prices rose 0.1% in June and 16.2% year over year. This is a decline from the 18.3% increase reported in May, but again still very strong on an annual basis.
Appreciation is clearly slowing, but as of June home prices were still increasing at a robust rate. As Craig Lazzara, Managing Director at S&P Dow Jones Indices, said, “It’s important to bear in mind that deceleration and decline are two entirely different things, and that prices are still rising at a robust clip."
The job sector was presented with some interesting news last week and, on the surface, it seems positive. We'll dig a little deeper so you can come to your own conclusion.
In the past, we've touched on the headline unemployment rate and that we prefer to use the U-6 All-In Unemployment Rate because it includes all of the individuals who are not actively searching for a job, a total of about 6 million people that otherwise would not be accounted for. Let's take a look at a current example.
The Unemployment Rate rose from 3.5% to 3.7%, though this is partially due to the rise in the labor force, which increased by 786,000. When we factor in all those people that the headline unemployment rate removes, the rate reads at about 7%! Although it's less palatable, the U-6 unemployment rate is more indicative of the true unemployment numbers and is almost double that of the headline unemployment rate.
According to the Bureau of Labor Statistics (BLS), about 315,000 jobs were created in August, slightly higher than expectations of 300,000. Keep in mind that there were negative revisions for June and July, effectively dropping the August report by 107,000 jobs.
While these job creation numbers look great on the surface, a closer look shows that people ages 16 to 19 years old made up 82% of the new hires. The majority of these jobs were entry-level positions and don't generally reflect big spenders in the economy.
After the long weekend, we've had and will continue to have a relatively slow week in regard to market news. Next week, we'll briefly recap the things we've covered recently. Stay tuned!
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