Eye on the Economy Home Price Growth is Slowing

BY: ROBERT DIETZ

HOME PRICE GROWTH

is Slowing

The second half of 2021 has seen a number of housing trends cool. For example, new single-family home sales slowed at the start of the spring as builders worked on a backlog of projects. In fact, sales are now down 4.4% on a year-to-date basis. This is not because of significant weakness in underlying housing demand, but rather an unsustainable pace of sales relative to achievable production levels given the availability of lumber, labor and lots.

Home prices appear to have reached a similar inflection point. While still rising, the rate of home price growth is slowing as prospective buyers are increasingly priced out of the market. The September S&P CoreLogic Case-Shiller data indicate that home prices expanded at a 15.1% annualized rate, which was slower than the 18.6% rate recorded in August. We forecast additional declines for home price growth in the quarters ahead, particularly as interest rates rise.

Another trend of 2020 also appears to be normalizing: the suburban shift for home construction. The third quarter NAHB Home Building Geography Index found that the relative growth rates for home building converged somewhat over the last year. In the third quarter of 2021, exurbs were growing at a 30.8% rate, while inner suburbs of core metro areas were growing at a 21.1% rate. Although construction continues to expand at a higher rate in the suburbs, the growth gap has narrowed between these market types.

In other macro data, the unemployment rate continues to fall, declining to a 4.2% rate in November. However, payroll employment data disappointed, with a gain of just 210,000 for the month. This was the smallest job gain since January. Nonetheless, home builders and remodelers added 10,300 jobs in November, yet more are needed given ongoing growth for residential construction.

George Douzos, 5D Construction LLC, (Primary Builder) Sponsored by Mike Meszes, DRC Construction 36344 Mills Road Avon, OH 44011 (216) 857-5459 gdouzos53@gmail.com https://www.5dconstructionllc.com/ 5D Construction, LLC is a family owned company that specializes in all phases of construction. We offer a high level of quality and personalized construction services. Customer satisfaction and our commitment to service is our primary focus. We take pride in finishing projects on time and within budget.

Mike DeAnna, 5D Construction LLC (Affiliate Builder) Sponsored by Mike Meszes, DRC Construction 36344 Mills Road Avon, OH 44011 (216) 789-4182 Mike@Century21DeAnna.com https://www.5dconstructionllc.com/ 5D Construction, LLC is a family owned company that specializes in all phases of construction. We offer a high level of quality and personalized construction services. Customer satisfaction and our commitment to service is our primary focus. We take pride in finishing projects on time and within budget.

Chris Ferguson, Fergs Construction LLC (Primary Associate) Sponsored by Sara Majzun, BCT Alarm Services, Inc. 25695 McMillan Road Wellington, OH 44090 (440) 371-0521 fergsconstruction@gmail.com

Adam Murawski, K. Hovnanian Homes, (Affiliate Builder) Sponsored by Jon Sherer, K. Hovnanian Homes 3296 Columbia Road Suite B Richfield, OH 44286 (216) 389-5108 AMurawski@khov.com https://www.khov.com/ We are a company devoted to building communities of excellence. K. Hovnanian Homes is heir to a history of solid success, financial strength, award-winning standards of homebuilding quality and an authentic commitment to customer satisfaction. Don Nemeth, NEM Construction Inc. (Primary Associate) Sponsored by Sara Majzun, BCT Alarm Services, Inc. 5124 Longbrook Rd Lorain, OH 44053 (440) 506-7041 nemconstructioninc@gmail.com https://nemwaterproofing.com/ We specialize in both exterior and interior basement waterproofing. Free estimates and quality work. Serving Northeast Ohio for over 40 years!

David Axford, Russell Real Estate Services (Primary Associate) Sponsored by Sara Majzun, BCT Alarm Services, Inc. 36178 Center Ridge Road North Ridgeville, OH 44039 (440) 281-3010 yourhomeboydavid@gmail.com http://www.yourhomeboydavid.com Real Estate can involve the biggest transaction of your life, so it is important to have an expert like me on your side to help maneuver through the process. My motivation to to get up every morning and make a difference stems from my passion and drive to help others. I am a proud Director for the Lorain County Association of Realtors, and a good standing member of the National Association of Realtors. My business is brokered by Russell Real Estate Services but ultimately my success is powered by people like you.

Ross Johns, Waxman Consumer Products Group (Primary Associate) Sponsored by Sara Majzun, BCT Alarm Services, Inc. 24460 Aurora Road Bedford Heights, OH 44146 (330) 690-0034 rjohns0914@gmail.com https://www.waxman.com/ Waxman is a leader in the design, development, and distribution of innovative surface protection and floor care products, other home improvement and hardware products, including faucets and showers; plumbing products and accessories; and home organization and storage solutions.