Case-Shiller and the Federal Housing Finance Agency released their House Price Indexes for August last week. Both reported that home prices decreased from last month, but appreciation increased when compared to August last year. Any drop in Home Appreciation data is concerning to homeowners, but it is important to keep in mind that, in recent years, home appreciation has been red hot. It was expected all along that appreciation would level out, but it is still very strong.
The Case-Shiller Index is viewed as the “gold standard” for home appreciation data. This report showed that prices fell 1.1% from July to August but increased 13% compared to August 2021.
The FHFA Index reported that single-family homes with conforming loan amounts decreased in value by 0.7% but increased by 11.9% when compared to August 2021.
While these indexes show a decline month-over-month, most of the decline was seen in major cities - San Francisco (-4.3%), Seattle (-3.9%), San Diego (-2.8%), Los Angeles (-2.3%), Denver (-2.3%) and Phoenix (-2.1%). If these cities are removed from the equation, the data was basically flat.
Last week, we also received the first reading of the third-quarter GDP, which showed better-than-expected growth in the US economy of 2.6%. While this is great news, it is important to remember two things - first, this reading follows two consecutive quarters of negative GDP; second, this was the first of three readings and can be revised when the second and third readings are reported later this year.
Core Durable Goods, which measures the production of nondefense capital goods and services, is a good reflection of business spending. This number came in about 1% weaker than expected, showing a 0.7% decline. With this factored in, we may see negative revisions to the first reading. The final readings for third-quarter GDP will be released on November 30 and December 22.
Next week, we’ll be reviewing the reports from the Fed's two-day meeting. It began yesterday and will finish up this afternoon with a press conference and Monetary Policy Statement. We're expecting an additional hike in the Fed Funds Rate as they scramble to get ahold of inflation. In addition, we'll be receiving the ADP Employment Report today and the Jobless Claims data tomorrow. Stay tuned for next week's breakdown!
FEMA granted Federal Disaster Status for the State of Florida on September 28, which opens the door to potential tax breaks for homeowners that reside or own a business in the state. Deductions can be used for anything that insurance didn't cover.
For more information, visit IRS.gov.