Finance
January home prices show steady annual gain, but month-to-month comparison tells another tale: Case-Shiller
Home prices hold steady, but more supply could help buyers. (iStock)
Home prices recorded another gain in January, but a month-to-month comparison showed values losing some ground, according to the latest S&P CoreLogic Case-Shiller Indices report.
Home prices are now 6% above their level this time last year, up from 5.6% last month. The 10-city composite increased by 7.4% annually, up from 7% the previous month. At the same time, the 20-city composite posted a rise of 6.6%, up from 6.2% the previous month.
Month-to-month, home prices struggled because of high mortgage rates and a lack of housing supply. While the 10-city composite registered no growth, the 20-city composite decreased by 0.1%—the indices measure home prices in major metros across the country.
“Homeowners most likely saw healthy gains in the last year, no matter what city you were in, or if it was in an expensive or inexpensive neighborhood,” S&P Dow Jones Indices Head of Commodities Brian Luke said. “No matter which way you slice it, the index performance closely resembled the broad market.”
“On a monthly basis, home prices continue to struggle in the face of elevated borrowing costs,” Luke continued. “Seventeen markets dropped over the last month, while Minneapolis has posted a 2.4% decline over the prior three months.”
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Spring home buying options improve
Spring buying will likely be tamed by still-too-high borrowing costs and limited housing inventory, two factors that have helped prop home prices up. However, improving for-sale options and the promise of an interest rate cut sometime in the summer mean relief is on the way.
At its latest meeting, the Federal Reserve said it would continue to monitor inflation and other economic indicators to determine when to lower rates. Market expectations are that the first rate cut will come in the summer, if not later in the year.
Meanwhile, housing inventory is improving. In February, housing starts climbed 5.9% year-over-year and home completions were 10.7% higher annually, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, signaling potentially more home options in coming months.
Overall, housing supply has improved, as the number of homes for sale increased by 14.8% compared to last year and grew for the fourth straight month, according to a report by Realtor.com.
“While elevated mortgage rates continued to freeze housing market activity over the winter, an unthawing is in sight, with improvements in for-sale inventory offering more opportunities for potential buyers across the country,” CoreLogic Chief Economist Selma Hepp said. “With spring’s arrival, home prices are likely to show a seasonal uptick, although the annual acceleration in gains will slow compared with the strong 2023 spring. Nevertheless, more inventory is a welcome development and suggests that some normalization in the U.S. housing market lies ahead.”
Homebuyers can find the best mortgage rate by shopping around and comparing your options. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
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Biden’s initiatives help build supply
A new initiative recently launched by President Joe Biden to improve affordability and supply issues could help increase demand for housing in the current high-rate environment. Biden has called on Congress to invest more than $175 billion in affordable housing initiatives, according to a White House statement.
In his State of the Union address earlier this month, Biden called on Congress to create legislation giving a $10,000 tax credit to first-time homebuyers and those who sell their starter homes. This move would help middle-class Americans cope with higher borrowing costs while incentivizing existing homeowners to sell more homes.
“Home price growth will likely not surge going into the Spring home buying season, as home sales are fairly stagnant at this moment,” Max Slyusarchuk, CEO of A&D Mortgage said. “We do believe rates will begin to drop in the second half of the year, and that will help pick up home sales, which will be buoyed by stable home values.”
If you are looking to take advantage of the current mortgage rates by refinancing your mortgage loan or are ready to shop for the best rate on a new mortgage, consider visiting an online marketplace like Credible to compare rates and get preapproved with multiple lenders at once.
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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Walmart stock may be a steal.
Former Walmart U.S. CEO Bill Simon contends the retailer’s stock sell-off tied to a slowing profit growth forecast and tariff fears is creating a major opportunity for investors.
“I absolutely thought their guidance was pretty strong given the fact that… nobody knows what’s going to happen with tariffs,” he told CNBC’s “Fast Money” on Thursday, the day Walmart reported fiscal fourth-quarter results.
But even if U.S. tariffs against Canada and Mexico move forward, Simon predicts “nothing” should happen to Walmart.
“Ultimately, the consumer decides whether there’s a tariff or not,” said Simon. “There’s a tariff on avocados from Mexico. Do you have guacamole with your chips or do you have salsa and queso where there is no tariff?”
Plus, Simon, who’s now on the Darden Restaurants board and is the chairman at Hanesbrands, sees Walmart as a nimble retailer.
“The big guys, Walmart, Costco, Target, Amazon… have the supply and the sourcing capability to mitigate tariffs by redirecting the product – bringing it in from different places [and] developing their own private labels,” said Simon. “Those guys will figure out tariffs.”
Walmart shares just saw their worst weekly performance since May 2022 — tumbling almost 9%. The stock price fell more than 6% on its earnings day alone. It was the stock’s worst daily performance since November 2023.
Simon thinks the sell-off is bizarre.
“I thought if you hit your numbers and did well and beat your earnings, things would usually go well for you in the market. But little do we know. You got to have some magic dust,” he said. “I don’t know how you could have done much better for the quarter.”
It’s a departure from his stance last May on “Fast Money” when he warned affluent consumers were creating a “bubble” at Walmart. It came with Walmart shares hitting record highs. He noted historical trends pointed to an eventual shift back to service from convenience and price.
But now Simon thinks the economic and geopolitical backdrop is so unprecedented, higher-income consumers may shop at Walmart permanently.
“If you liked that story yesterday before the earnings release, you should love it today because it’s… cheaper,” said Simon.
Walmart stock is now down 10% from its all-time high hit on Feb. 14. However, it’s still up about 64% over the past 52 weeks.
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Investors may want to reduce their exposure to the world’s largest emerging market.
Perth Tolle, who’s the founder of Life + Liberty Indexes, warns China’s capitalism model is unsustainable.
“I think the thinking used to be that their capitalism would lead to democracy,” she told CNBC’s “ETF Edge” this week. “Economic freedom is a necessary, but not sufficient precondition for personal freedom.”
She runs the Freedom 100 Emerging Markets ETF — which is up more than 43% since its first day of trading on May 23, 2019. So far this year, Tolle’s ETF is up 9%, while the iShares China Large-Cap ETF, which tracks the country’s biggest stocks, is up 19%.
The fund has never invested in China, according to Tolle.
Tolle spent part of her childhood in Beijing. When she started at Fidelity Investments as a private wealth advisor in 2004, Tolle noted all of her clients wanted exposure to China’s market.
“I didn’t want to personally be investing in China at that point, but everyone else did,” she said. “Then, I had clients from Russia who said, ‘I don’t want to invest in Russia because it’s like funding terrorism.’ And, look how prescient that is today. So, my own experience and those of some of my clients led me to this idea in the end.”
She prefers emerging economies that prioritize freedom.
“Without that, the economy is going to be constrained,” she added.
ETF investor Tom Lydon, who is the former VettaFi head, also sees China as a risky investment.
“If you look at emerging markets… by not being in China from a performance standpoint, it’s provided less volatility and better performance,” Lydon said.
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