Last week’s economic reporting included readings from S&P Case-Shiller Home Price Indices, The Federal Housing Finance Agency on home prices for homes owned or financed by Fannie Mae and Freddie Mac, and reporting on Construction spending. Weekly readings on mortgage rates and jobless claims were also released.

S&P Case-Shiller: Home Prices Rise in March, but Affordability May Slow Future Gains

National home prices grew at a year-over-year pace of 20.60 percent in March according to S&P Case-Shiller’s National Home Price Index. The 20-City and 10-City Composite Indices also showed continuing growth in home prices, but analysts cautioned that rising home prices and mortgage rates would soon slow gains in home prices.

The average rate for a 30-year fixed rate mortgage nearly doubled year-over-year from 2.75 percent last fall to approximately 5.25 percent currently. Ongoing high demand for homes continues to drive prices up as buyers compete for short supplies of available homes. This continues to create obstacles for first-time and moderate-income home buyers who cannot compete in bidding wars or qualify for mortgages needed to finance inflated home prices.

The 20-City Home Price Index saw Phoenix, Arizona lose its long-held first-place position to Tampa, Florida, which reported a  year-over-year gain of 34.80 percent; Phoenix, Arizona reported year-over-year home price growth of  32.40 percent, and home prices in Miami Florida rose by 32.00 percent.

Craig Lazzara, a Managing Director at S&P Dow Jones Indices, said, “Those of us who have been anticipating a deceleration in the growth of U.S home prices will have to wait at least a month longer.” Analysts expect affordability to slow rapid home price growth as high home prices and mortgage rates erode affordability, but Mr. Lazzara said that there was no way to know exactly when home price growth would start to slow down.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported that home prices for single-family homes owned or financed by the two government-sponsored enterprises rose by 19.00 percent year-over-year.

Mortgage Rates Hold Steady, Jobless Claims Decline

Freddie Mac reported little change in mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 5.09 percent and were one basis point lower; the average rate for 15-year fixed-rate mortgages rose by one basis point to 4.32 percent. Rates for 5/1 adjustable rate mortgages dropped by 16 basis points to 4.40 percent. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

New jobless claims fell last week to 200,000 initial claims filed; 211,000 first-time claims were filed in the previous week. Fewer continuing jobless claims were filed last week with 1.31 million ongoing claims filed as compared to the previous week’s reading of 1.34 million continuing jobless claims filed.

The Commerce Department reported slower construction spending in April, with month-to-month growth of 0.20 percent as compared to the March reading of 0.30 percent and the expected reading of 0.50 percent growth.

What’s Ahead

This week’s scheduled economic reporting includes several readings on consumer price inflation and the University of Michigan’s reading on consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.