Home prices in the U.S. rose for the fifth consecutive month in June, despite high mortgage rates, with national prices increasing by 0.9% and only down 0.02% from their peak in June 2022, according to the S&P CoreLogic Case-Shiller index. However, there were significant regional differences, with cities on the West Coast experiencing some of the biggest declines. The housing market continues to face challenges due to low inventory and slow new construction.
The latest data on inflation, gas prices, SNAP benefit cuts, job prospects, Wells Fargo layoffs, student loan scams, and McDonald's beverage stations are discussed in this financial news update.
The US sectoral flows for August 2023 have shown a significant decrease in financial balances, which is expected to negatively impact asset markets heading into September and potentially October, with a potential turnaround in markets expected in October. The upcoming mid-September federal corporate tax collections are likely to further decrease financial balances in the private domestic sector. The federal government's spending and credit creation, along with bank credit creation, will play a role in the future trends of asset markets. The real estate market is also showing signs of slowing down due to rising interest rates. Overall, the macroeconomic indicators suggest a strong Xmas/New Year rally and a positive first quarter of 2024 for asset markets.
Home prices in California reached a 15-month high in August 2023, attributed to rising mortgage rates and a shortage of homes on the market, but the market is expected to improve in the last quarter of the year as interest rates ease, according to the California Association of Realtors.
Despite steep mortgage rates, home prices in the U.S. rose for the sixth consecutive month in July, with a 0.6% increase nationally and a 1% increase from the peak in June 2022, according to the S&P CoreLogic Case-Shiller index. There were regional differences, with Chicago experiencing the highest annual gain at 4.4% and Las Vegas and San Francisco seeing notable price declines of 7.2% and 6.2% respectively. The housing market continues to face challenges due to low inventory and high mortgage rates.
The end of the freeze on federal student loan payments in October is expected to negatively impact the U.S. housing market, with economists predicting a lasting effect on homeownership rates for at least a year and potentially longer. The resumption of payments is also anticipated to increase delinquency rates and further worsen the housing affordability crisis caused by high mortgage rates and a shortage of available homes.
Next year, experts predict that prices in California will stabilize, with food and gasoline price increases slowing down, but housing costs potentially climbing more than the average rate of inflation.
Long-term Treasury yields are rising, potentially bringing an end to the historic interest rate hikes used to control inflation and causing economic pain for American consumers in the form of higher loan and mortgage rates. However, the rise in yields may also help lower inflation, and the Federal Reserve remains attentive to these developments as it considers future rate hikes. In terms of investment advice, investors are advised to stay steady and respect the lag of tightening monetary policy. Meanwhile, the frozen housing market in the US is seeing a decline in home sales due to surging interest rates and rising home prices, making homeownership unattainable for many, and potentially signaling a new era for the housing market. Finally, Snapchat is achieving success with its paid subscription service, with 5 million subscribers generating significant revenue, highlighting the willingness of users to pay for a premium experience on the platform.
