Home Prices Charging Back to New Highs
Case Shiller home price data published by S&P CoreLogic was released earlier this week for July 2023 (it comes out on a two-month lag). As shown below, 19 of 20 cities posted month-over-month gains, with the National index up 0.6% MoM and up 0.98% year-over-year. Las Vegas saw the biggest monthly gain at 1.12%, while Portland was the only city to see a monthly decline.
The big news from the report was that the National index and ten of twenty cities once again hit new all-time highs, erasing declines seen from mid-2022 through early 2023. The National index saw home prices fall 5% from its prior high last June to its low this January, but it has bounced back by 6% since then to notch new highs. The ten cities to also make new highs were: New York, Minneapolis, Miami, Detroit, DC, Cleveland, Chicago, Charlotte, Boston, and Atlanta.
Four cities remain 5%+ below their prior highs: Phoenix (-6.7%), Las Vegas (-7.2%), Seattle (-10.1%), and San Francisco (-10.8%).
Below is a look at how much home prices have jumped from their lows made either at the end of 2022 or earlier this year. As shown, San Diego, Detroit, and Chicago have seen home prices rally the most at 9%+, while Tampa, Las Vegas, and Phoenix have rallied the least at just 4%.
Below we show the actual home price index levels for the twenty cities plus Case Shiller’s three composite indices. Cities highlighted in green are the ones that are back to all-time highs. With interest rates rising so far so fast from very low levels, existing mortgage holders have frozen up, which has frozen the market of homes for sale. The extreme lack of supply has caused prices to increase, not decrease, thus far, but barring a pretty big drop in mortgage rates. we don’t see this as sustainable in the months and years ahead.
Bespoke’s Morning Lineup – 9/28/23 – Ted Williams Month
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“Baseball is the only field of endeavor where a man can succeed three times out of ten and be considered a good performer.” – Ted Williams
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Futures are getting a bit of a boost this morning as revised GDP for Q2 was slightly weaker than expected coming in at 2.1% versus forecasts for a reading of 2.2%. Other data saw some larger moves. Personal Consumption was more than cut in half from 1.7% down to 0.8% while the GDP Price Index was revised down to 1.7% from 2.0%. Initial Jobless Claims rose 3K from 201K up to 204K, but that was still more than 10K below the consensus forecasts. Overall, this data was market friendly pushing equity futures higher and yields lower. The 10-year yield which touched 4.65% earlier is now slightly below 4.61%.
In a meaningless doubleheader to close out the MLB season 82 years ago, Ted Williams got six meaningful hits in eight at-bats pushing his average to .406 becoming the first player since 1930 and the last player since then to hit .400 (Williams also hit a home run on his last career at-bat on this day 19 years later in 1960). Hitting .400 is next to impossible in baseball (hence the quote above), but in the stock market it isn’t very good. Heading into today’s trading, the S&P 500 has traded higher on just eight out of eighteen sessions which works out to 44.4% of all trading days, but if the last two trading days are negative, September will finish off as a .400 month. If that happens, we’ll just call it Ted Williams month!
There hasn’t been a lot of good news to speak of lately, but maybe the image from our Seasonality snapshot below will brighten your mood a bit. While the upcoming week ranks in just the 29th percentile of all one-week periods throughout the year, the next month ranks in the 89th percentile, and the next three months rank in the 100th percentile. History doesn’t always repeat itself, but from a seasonality perspective, it doesn’t get much better than that!
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The Closer – Shorted Stocks Suffer, CFO Optimism, Oil Inventories – 9/27/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with an update on the latest short interest data (page 1) followed by a dive into performance around Federal government shutdowns (page 2). We then take a look at the latest CFO survey (pages 3 and 4) before finishing with looks at today’s EIA data (page 5) and Treasury auction (page 6).
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Daily Sector Snapshot — 9/27/23
Chart of the Day – Everything’s Oversold
Bespoke’s Morning Lineup – 9/27/23 – Can We Get a Bounce?
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“For those who believe, no proof is necessary. For those who disbelieve, no amount of proof is sufficient.” – Ignatius of Loyola
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As the market declines this month, the number of ‘believers’ is starting to shrink, and while they haven’t necessarily turned bearish yet, former bulls are looking over their shoulders. The prospect of a government shutdown is just one of many concerns weighing on investors this week, and based on the intransigence of both parties, making a deal before the deadline looks increasingly difficult. The quote above from Ignatius of Loyola may be over 500 years old, but it’s just as applicable today as it was back then. With each side of the aisle increasingly locked into their tribal ideology, no amount of ‘proof’ is enough to get the other to see ‘the light’.
Futures have been trending higher all morning as the market looks to regroup from yesterday’s beating. The only data on the economic calendar this morning was Durable Goods orders which came in higher than expected for August (+0.2% vs. -0.5%), but July’s reading was revised down to -5.6% from -5.2%.
With the S&P 500 falling to its most extreme oversold levels of the year yesterday, it should come as no surprise that most of them are also at what we would classify as ‘extreme’ oversold levels. The only sector even above its 50-day moving average is Energy. Declines have been broad-based during the sell-off of the last week. Real Estate and Consumer Discretionary are both down 5.81% followed by Technology, Utilities, and Financials which are all down over 4%. Just to illustrate how bad a week it has been, the two best-performing sectors – Health Care and Energy – are down well over 1%.
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The Closer – Nasdaq New Low, New Home Sales, Five Fed Rebounds – 9/26/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with a look at the Nasdaq 100’s 3 month low (page 1) followed by a dive into the latest Consumer Confidence numbers (page 2). We then show the details of today’s new home sales report (pages 3 and 4) then show an update of our Five Fed Manufacturing composite with the addition of the Richmond Fed (page 5). We finish with a recap of the 2 year note auction held this afternoon (page 6).
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