Home price gains slow as inflation outpaces affordability
U.S. home prices rose 2.1% in August, a slower pace than the 3.4% inflation rate. The data comes alongside resilient durable goods orders and a mixed corporate earnings picture.
Home prices rose 2.1% in August, according to the Case-Shiller Home Price Index. This growth, which accelerated to a 2.65% annual rate, was 10 basis points ahead of expectations but still lagged behind the 3.4% inflation rate for the month. The national index rose 2.09%, while the 20-city survey showed a 2.7% gain. In real terms, home prices have been falling for 15 consecutive months. The median home cost hit a record $429,100 for August, even as mortgage rates remained above 7% for the third straight month.
Performance varied sharply across major metropolitan areas. Chicago led with a 6.7% price increase, followed by New York at 6.2% and Cleveland at 4.3%. Seattle was at the bottom of the list, with prices declining by 2.0%.
Durable goods orders show resilience
New data on factory orders provided a counterpoint to housing market concerns. Durable goods orders for September improved sharply, rising 1.8% after showing no growth the previous month. A key measure of business investment, non-defense capital goods orders excluding aircraft, gained 0.5%. Shipments, which feed directly into GDP calculations, increased by 1.2%. Also, unfilled orders rose, creating notable backlogs that signal support for future manufacturing activity and economic growth.
Corporate earnings miss Boeing, beat UPS and Coca-Cola
Corporate earnings results painted a mixed picture. Boeing reported a significant loss and revenue miss, while United Parcel Service and Coca-Cola exceeded expectations. The aerospace giant's results disappointed investors.
| Company | Earnings Per Share | Result vs. Expectation | Revenue | Revenue Result vs. Expectation | Stock Reaction (Day of News) |
|---|---|---|---|---|---|
| Boeing | -$0.34 | Miss by -62% | $24.19 billion | Miss by -0.39% | Down -2.12% |
| United Parcel Service | $1.69 | Beat by $0.06 | $22.85 billion | Beat by +2.70% | Not specified |
| Coca-Cola | $0.91 | Beat by $0.04 | $13.35 billion | Beat by +3.3% | Down -1.4% |
Boeing's shares fell on the news, deepening the stock's year-to-date decline to 13%. Despite beating estimates, Coca-Cola shares also traded lower.
Market reactions and commodity trends
Stock indices posted modest gains alongside the economic data. The Dow Jones Industrial Average rose 117 points, the Nasdaq added 164, the S&P 500 gained 28, and the Russell 2000 increased by 12 points. In commodity markets, oil prices held at raised levels, with West Texas Intermediate crude near $100 per barrel and Brent crude around $114. The steady prices recall levels seen in August when Brent was also near the $100 mark. The contrast between slowing nominal home price growth and persistent inflation shows the ongoing challenge of housing affordability. Zacks Equity Research summarized the dynamic, stating: "Home Prices Rise Slower Than Inflation in August."
