U.S. home prices surge 5.7% in January on tight supply
Buyers continue to take advantage of low mortgage rates.
U.S. home prices jumped in January from a year earlier at the fastest pace in nearly 2½ years, as a tight supply of houses for sale spurred bidding wars in many cities.
The Standard & Poor’s CoreLogic Case-Shiller 20-city home price index, released Tuesday, increased 5.7 percent in January, the most since July 2014.
Americans stepped up homebuying in January, even as mortgage rates rose. Many buyers likely sought to close their deals before rates increased further.
The Federal Reserve implemented its third interest rate hike in two years March 15, but economists at S&P Dow Jones Indices say higher rates won’t slow sales until later this year.
The biggest price gains were in Seattle, Portland and Denver, which have topped the other cities in the index for months.
Mark Fleming, chief economist at First American, said that still-low mortgage rates and steady hiring will likely support further housing demand.
“Low mortgage rates and economic growth set against a low inventory of homes for sale will drive a strong sellers’ market and further rising prices this spring,” Fleming said.
David Blitzer, chairman of the S&P Dow Jones Index Committee, said that the Fed’s most recent increase won’t push up mortgage rates very much and shouldn’t affect sales.
Average 30-year mortgage rates typically track the yield on the 10-year Treasury note. That yield is usually driven by several factors, including broader economic conditions and investor demand for safe assets such as Treasurys.
Still, should the Fed raise rates three or four more times this year, “rising mortgage rates could become a concern,” Blitzer said. Fed officials currently forecast two additional hikes.
Robust price gains could eventually make housing less affordable, Blitzer said. That may already be discouraging some homeowners from “trading up” to a new home, making the supply crunch worse as fewer people put their homes up for sale.
“At some point, this process will force prices to level off and decline — however we don’t appear to be there yet,” Blitzer said.
There were just 1.75 million homes listed for sale in February, 6.4 percent lower than a year ago, near the lowest level since the National Association of Realtors began tracking the data in 1999.
Timed to air first during the Dell Match Play golf tournament in Austin last week, the TV ad starts out with a magic show on stage, with actor Jeffrey Wright explaining that what seems like magic is actually just the transformative power of technology, which is developed by real people at Dell Technologies.
Part of the ad’s purpose is to unify all the different companies Dell purchased as part of the EMC deal under one brand. Or, as Wright intones during the ad: “Introducing Dell Technologies. Seven technology leaders now working together under one name.”
But the ad also highlights how Dell’s technology can help industries, from agriculture to health care. Yes, Dell still makes personal computers. But now Dell is much more of a business-to-business company, focused on selling IT hardware (and some software) to businesses and governments.
”We’re trying to reach the business decision-makers, the CIOs, the very senior IT decision-makers,” Matthews said. “Many people know Dell, but they don’t know Dell Technologies.”
The goal isn’t necessarily to sell more IT equipment, but to “drive awareness of Dell Technologies as this umbrella brand,” Matthews explained.
This is hardly the first time Dell Technologies has tried to showcase its IT solutions to businesses, but it is the first time it has done so under a new name. Dell Technologies is still running separate TV ads for its personal computer products under the “Dell” name.
Dell has come a long way in its marketing efforts from the famous “Dell Dude” years. This popular campaign started in 2000 and ran for three years. The first ad featured a goofy kid named Steve who wanted a Dell computer for Christmas.
Matthews said the company’s marketing efforts shifted focus in the mid 2000s as its business began to change, swerving into other hardware and software solutions for businesses, such as servers and storage.
She said 2009 was the first year Dell “really made a very concerted effort to unify the Dell brand,” launching campaigns that attempted to tie together Dell’s efforts to help consumers and businesses.
“This campaign will do a lot to solve their problems if they want to get to business people to know who they are,” said Terry Hemeyer, who teaches communications strategies at the University of Texas at Austin.
But he warned that it won’t be easy for Dell Technologies to familiarize customers with the new brand.
“It’s going to be tough to do because it’s been ensconced for years (as Dell),” he said.
U.S. home prices jumped in January from a year earlier at the fastest pace in nearly 21/2 years, as a tight supply of houses for sale spurred bidding wars in many cities. The Standard & Poor’s CoreLogic Case-Shiller 20-city home price index, released Tuesday, increased 5.7 percent in January, the most since July 2014. The biggest price gains were in Seattle, Portland and Denver.