Vital Statistics:
Consumer confidence fell in February as expectations for the future slid to a 12-year low. The expectations index fell below the threshold that typically signals a recession.
“Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “Of the Index’s five components, only consumers’ assessment of present labor market conditions improved, albeit slightly. Views of current business conditions weakened to close to neutral. Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low. Meanwhile, consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”
The decline in the stock market hasn’t helped things either. The overall message is that tariffs are stoking fears of future inflation and consumers are worrying that will tank the labor market. The vibecession continues.
New Home Sales rose 1.8% MOM and 5.1% YOY to a seasonally adjusted annual rate of 676,000. The number was more or less in line with expectations. The median sale price fell 1.5% to $414,500. This comports with KB’s results which showed that all the action was in the lower price points. We still have yet to see any meaningful life in new home sales despite the drop in rates.
The S&P Case-Shiller Home Price Index rose 4.1% in January to hit a new all-time high. New York led the charge again, followed by Chicago and Boston. Tampa slid again.
“Rising mortgage rates throughout the year elevated monthly payment burdens, which, combined with already high home prices, pushed affordability to multi-decade lows in many regions. This likely contributed to subdued activity in the back half of the year, with both buyers and sellers exercising
caution. Inventory constraints also remain a challenge, particularly in legacy metro areas, where limited new construction continues to restrict supply.
“The strength in markets like New York and Chicago may reflect more normalized valuations relative to frothier regions, along with continued urban recovery trends post-pandemic. On the other hand, Sunbelt markets that experienced sharp run-ups earlier in the cycle—like Tampa and Phoenix—have seen the most pronounced slowdowns.
“Despite near-term softness, the S&P CoreLogic Case-Shiller Index remains historically elevated, and long-term homeowners have continued to build equity,” Godec concluded. “The current cycle reinforces the value of real estate as a long-duration asset, but also highlights how sensitive home prices are to
changes in financing conditions and buyer affordability.”
Separately, the FHFA House Price Index rose 0.2% MOM and 4.8% YOY.
The FHFA will not cut the conforming loan limits, the agency said. “There are no plans to do anything as it relates to the conforming loan limit,” Pulte said Tuesday. Conservative think tanks have been pushing the idea that Fan and Fred should not be guaranteeing million dollar properties when there is clearly a demand for these loans in the private label market.
That said, the GSEs make the biggest margins on the high-end mortgages and these profits subsidize the less profitable products like Home Ready. So reducing these loans could cause the first time homebuyer loans to become more expensive.
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