Home prices up 52% over past 5 years/Eggs and tariffs matter/Cloudy mfr'g outlook

In December, the S&P CoreLogic home price index saw a 3.9% y/o/y increase and continues to be a major affordability problem for the first time buyer who is not playing with ‘house’ money. For perspective, since February 2020 when the Fed was on the cusp of going hog wild with monetary easing, including massive purchases of MBS, this index is up 52%.

If this was included in CPI instead of owners’ equivalent rent which was up ‘only’ 27%, we would have seen double digit inflation in 2022.

Home Price Index

On the heels of the politically slanted UoM consumer confidence index, the February consumer confidence index from the Conference Board fell to 98.3 from 105.3. Almost all of the decline was in the Expectations component which fell almost 10 pts m/o/m while the Present Situation was lower by 3.4 pts. As seen in the UoM, there was a jump in one yr inflation expectations, to 6% from 5.2% and that is the highest since May 2023.

With that inflation expectations pop, the Conference Board said “This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs. References to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics. There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019.”