U.S. home prices were down sequentially in November. The S&P/Case Shiller showed that home prices grew 0.3 percent, a strong rate of rise albeit slower than what was seen in recent months. Home prices were up 0.4 percent in October and 0.8 percent in September.
Therefore, the three-month annualized rate has risen to 6.1 percent and implies stabilization in overall home price inflation after it decelerated steadily throughout 2018. At the city level, prices were up in 15 metropolitan areas, were flat in one and fell in four. San Francisco and Seattle were the cities with largest declines.
Recently, there has been a wide easing in the housing market that is clear in home prices, housing starts and sales data. However, today’s report implies that, at least on the price front, momentum appears to be rebounding. Overall, worsening home affordability, rising mortgage rates, and declining home inventory were all headwinds to housing last year.
“Our baseline scenario is for housing to plateau at current levels throughout 2019, rather than a sharp deterioration. This reflects our view that although home affordability may deteriorate a bit further as the Fed continues to increase interest rates, this should be offset by gradually rising wages and a continued pickup in employment, which both support household incomes”, said Barclays in a research report.
Moreover, the balance between demand and supply of housing as finely matched, which should avert a sharp correction in home prices.
At 18:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -71.3653 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
