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.

Jake Berger, All Construction Services (Affiliate Builder) Sponsored by Dave LeHotan, All Construction Services 945 Industrial Parkway North Brunswick, OH 44212 (330) 220-6666 x. 231 jake.berger@installed.net http://allconstructionohio.com/ Serving Northeast Ohio and Western Pennsylvania, All Construction Services provides top-quality products and expert installation to residential and commercial builders, in addition to the general public.

Fabian Candelario, Blue Square Renovations (Primary Builder) Sponsored by Sara Majzun, BCT Alarm Services, Inc. 38014 Stoney Lake Drive North Ridgeville, OH 44039 (440) 396-8960 Fabian.Candelario21@gmail.com https://www. bluesquarerenovations.com/ We are truly a family operated company that offers a more personal and hands on experience during your home projects and renovations. We started this company to provide a unique and exciting individual experience for our clients that is tailored to their specific needs. We have a passion for helping others realize their home, commercial and overall real estate visions. George Litten, See-Thru Window Company

Thank You for Renewing!

Kenneth Brady, Brady Plumbing & Heating Tom Caruso, Caruso Cabinets Aaron Kalizewski, Grande Maison Construction Company, LLC Jeff Reichert, J.L. Reichert, Inc. Gary Kaminski, Kaminski Roofing, Inc. Jim Tipple, Maranatha Custom Homes, Inc. Jason Mitchell, Mitchell Woodworking, Inc. Jennifer Gonzales, National Design Mart Tracy Goldsmith, Northern Ohio Basement Waterproofing, Inc. Beth Fritz, Norwalk Concrete Industries James Sturgill, Sturgill's Drywall, Inc. Greg Zimmerman, Zimmerman Remodeling & Construction, Inc.

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