S&P Analysts: Accelerating Home Prices Reflect Economic Recovery
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MND NewsWire features plain and simple interpretations of industry related data and events written in a manner that maintains the interest of random readers while still catering to the perspective of a housing market professional.
Share: Apr 27 2021, 10:01AM
A month after interest rates began to rise, neither the S&P CoreLogic Case-Shiller indices nor that from the Federal Housing Finance Agency (FHFA) found any slowdown in home price appreciation.
Both logged double digit annual increases, in all cases higher than those in January.
The Case-Shiller National Home Price Index, which covers all nine U.S. census divisions, rose 12.0 percent in February compared to an annual increase of 11.2 percent in January. On a month-over-month basis the National Index was up 1.1 percent before and after seasonal adjustment.
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The BLS says the CPI is up only 1.4% from a year ago.
However, the CS-CPI has been running between 2% and 3% for the past three years and most of the past seven years. By this measure, the Fed has already achieved its goal.
Yet, the Fed is holding rates near zero and has pledged to remain that way.
We can calculate
Real Interest Rates
Thanks to the Fed slashing interest rates to near-zero, real interest rates are -3.45% as measured by CS-CPI but only -1.31% as measured by the CPI.
Third Great Fed Mistake
With the real interest rate at -3.45% is it any wonder speculation in stocks, junk bonds, and housing are rampant?
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