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Case-Shiller Up, Home Sales & Consumer Confidence Down

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This morning, just a half-hour prior to the opening bell, the latest Case-Shiller Home Price Index was released for the month of July. It’s among the most backward-looking monthly economic reports, but it also stands alone among housing data that does not find itself subject to major revisions. And what we saw this morning were record-high home prices — taking out the previous record in July 2022 — in its first positive print in five months.

None of this was unexpected, really: the 20-city index grew +0.1%, below the +0.3% expected but a jump from the previous month’s -1.2%. The 10-city showed the more dramatic shift, +0.9% from July last year. Home prices overall are +5.3% year to date. And all this with mortgage rates averaging north of +7% — the highest in more than 20 years.

Once again, the Midwest led the way with the strongest home price growth for the month, +3.2%, led by Chicago at +4.4% and Cleveland +4.0%. The Northeast was next at +2.3%, led by New York at +3.8%. The fastest-falling home-price cities were some of the top growers just a year or two ago: Las Vegas -7.2%, Phoenix -6.6% and San Francisco -6.2%. The South fell -3.6% in July, and the West was -3.8%.

After today’s open, New Home Sales for August came out, showing a shifting narrative from the previous month’s Case-Shiller data: 675K seasonally adjusted, annualized units, -20K fewer than expected and well off the previous month’s upwardly revised 739K, which was originally reported at 714K. We again point to 20+ year highs in mortgage rates last month as the culprit, with homebuilders not yet keeping up with supply of housing even as supply chain issues continue to iron themselves out.

Consumer Confidence in September also hit the tape this morning during the normal trading session, with 103.0 coming in below the expected 105.5 and the upwardly revised 108.7 for August. Even though this is not a major economic data point (compared to this Friday’s Personal Consumption Expenditures [PCE], for example), it is this slight but steady erosion in economic metrics that will help the Fed continue to keep interest rates where they are, instead of cranking them up another 25 basis points (bps), which is currently being priced into equity valuations.

With the scant moment of the small-cap Russell 2000 peeking into positive territory for a few minutes this morning, all the major indices opened today’s session in the red and stayed there. The Dow lost all of its gains from yesterday and then some, -388 points, -1.14% on the day. The Nasdaq fell the farthest for the session, -207 points, -1.57% — and now down nearly -7% month to date —  while the S&P 500 lost -1.47%. The Russell, now -8.4% from the start of this month, was -1.27% today.

After the closing bell, warehouse club retailer Costco (COST - Free Report) reported better-than-expected earnings and sales in its fiscal Q4 report this afternoon: earnings of $4.86 per share on revenues of $78.94 billion surpassed expectations of $4.71 per share and $78.56 billion, respectively. Comps rose +1.1% for the quarter, but were down -0.8% in e-commerce. Membership fees came in higher than anticipated at $1.5 billion. However, late traders are selling the news on this overall good quarter, -1.3%, after gaining roughly +22% year to date.

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