Home Prices Soar, Inflation Makes Consumers Gloomier
Home prices posted a record yearly increase, and inflation punctured consumers’ confidence in the economy and their own finances, reports showed Tuesday.
Here’s a quick look at the most significant economic indicators of the day and what they tell us.
S&P Case-Shiller Home Price Index
- The widely used index showed home prices rose a seasonally adjusted 1.3% in December, bringing them to 18.8% higher than a year earlier. With the year now in the books, 2021 officially saw the fastest home price growth since at least 1988 when the index began collecting data, and it’s not even close—the previous record, set in 2004, was only 13.6%.
- The report threw a little cold water on the hopes of homebuyers anticipating a slowdown of those increases: December’s year-over-year gain was the same as November’s, which broke a three-month trend of decelerating annual price increases. However, the market will soon feel the impact of a recent spike in mortgage rates, said Craig J. Lazzara, managing director at S&P Dow Jones Indices, in a commentary.
Conference Board Consumer Confidence Survey
- Consumers grew slightly gloomier in February, according to The Conference Board’s Consumer Confidence Index, which measures how people feel about the economy and their own finances.
- The index declined for the second straight month, as consumers grew more pessimistic about inflation and the prospects for economic growth in the near future. The index showed that people mostly don’t expect the economy to pick up steam in the near future, although they also don’t expect it to get worse, according to Lynn Franco, senior director of economic indicators at The Conference Board.
- Consumers’ pessimism influences their spending, which is the main engine of US economic growth. Inflation—which has been surging lately—is likely to continue to dampen attitudes and hold back spending, Franco said in the report.
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