The housing prices are expected to keep rising in the U.S. The S&P CoreLogic Case-Shiller report, which uses a repeat-sales methodology to track changes in U.S. home prices, is set to be released on Tuesday. This report offers benchmark insights into the housing market. Here are the five things to watch for tomorrow’s report.
1. Housing prices continue to rise or cool off?
Economists’ estimates from the Bloomberg survey show that home prices in February are likely to tick up to 4.7%, last month home prices grew 4.1% in January, hitting a record high in the past 12 months. Though the home prices have continued to rise, the rising pace has shown signs of moderation, with slight fluctuations. For example, while January saw a 2% monthly increase, February’s projected 1% indicates more stability, though still elevated.
2. President Donald Trump’s plans spell trouble ahead — tariffs and immigration
The current 25% tariffs on steel and aluminum, which made imported construction materials more expensive, could drive up home building costs, which will limit the housing supply, also builders could pass those extra costs on to buyers, these all could impact the housing market.
“The uncertainty of the Tariff Tantrum is now firmly embedded in the housing market, impacting trends and impacting the spring market, the most significant selling period of a typical year,” said Jonathan Miller, President and CEO of Miller Samuel Inc. in his article.
At the same time, immigration policies are getting more restrictive, and 34% of construction workers are immigrants according to a report from the Economic Policy Institute, also the mass deportation fear is pushing many of those out of the workforce, causing labor shortages, made it even more expensive to build new homes, and limit housing supply in the market.
“Labor shortages may prevent a housing project from getting done altogether, further constraining the supply of housing available in a market,” said Jorge Gonzales, a senior research associate housing and communities division of the Urban Institute.
3. Not enough houses on the market
While home sales accelerated in February, for-sale housing inventory remains well below the pre-pandemic level, and multiple hinders will likely keep the inventory deficit for some time. Many homeowners are still “locked in” at record-low mortgage rates in the past few years, enjoyed the increased home values, not willing to exchange for a higher rate in a high-priced housing market, which leads to the current low supply. The cost of raw materials and labor shortage mentioned above make building new homes even harder.
4. More pressure on first-time home buyer
First-time homebuyers are facing more pressure from all the factors. Home prices continued rising, and historically high mortgage rates, close to 7%, uncertain policies, and the big environment made it harder for them to have access to new homes. Many of them are dealing with rising monthly rents, making it even more difficult to save for a down payment. The complex pressures are pushing homeownership further out of reach for younger and lower-income buyers.
5.Federal Reserve interest rate decisions
With rising inflation risk under Trump’s tariffs, the Federal Reserve is staying cautious, watching closely to see if the interest rates need to be cut. At the same time, Trump is putting pressure on Fed Chairman Jerome Powell to lower interest rates, intensifying more pressure on him. However, even if the Fed cuts short-term interest rates, the long-term rate like the 10-year-Treasury yield has been rising, which directly affects the mortgage rates, and further impacts the housing market.