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Home Prices Decline, Holiday Bonuses Flat, Retail Inventories Rise

What You Need To Know To Start Your Day

Photo Via LoopNet: Pricing and unit sales of existing homes have been declining for the past several months. (Getty Images)

By Lou Hirsh CoStar News December 27, 2022 | 2:45 P.M.

Home Prices Decline

A closely watched measure showed home prices declined in October for the fourth-straight month, among other lingering signs of a slowdown in the housing market in the face of high mortgage rates and concerns about a potential recession.

A Tuesday report from analysts at S&P Global, CoreLogic and Case-Shiller said prices declined 0.5% in October from the prior month. This follows news that the number of existing-home sales fell for 10 consecutive months through November, the National Association of Realtors trade group reported last week.

“These declines, of course, came after very strong price increases in late 2021 and the first half of 2022,” Craig Lazzara, managing director at S&P Dow Jones Indices, said in a statement Tuesday. He noted U.S. prices in October were still 9.2% higher than a year earlier, though the rate of annual price growth dropped considerably from September’s 10.7%.

Miami and Tampa in Florida, along with Charlotte, North Carolina, had the highest year-over-year price gains, led by Miami at 21%. But all 20 major cities tracked in the monthly index reported lower price growth in October than a year earlier.

“Despite considerable regional differences, all 20 cities in our October report reflect these trends of short-term decline and medium-term deceleration,” Lazzara said. “As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices.”

Home sales trends affect multifamily demand in many regions, as prospective buyers stay in the rental pool while waiting for buying and borrowing conditions to improve. Holiday Bonuses Flatten Out

The end-of-year holiday season is not immune to the cautious spirit now permeating companies in multiple industries as layoffs rise. More employers this year than last are not planning to hand out bonuses, and most of those that do won’t be raising the value from a year ago, according to a national survey by outplacement firm Challenger, Gray & Christmas.

“As companies enter uncertain economic conditions, they are attempting to cut costs while still showing their current workers they are valued,” Senior Vice President Andrew Challenger said in a report on the Chicago-based firm’s online survey of 252 companies of various sizes and industries.

Conducted during October and November, the survey found 27% of respondents are not rewarding bonuses this year, up from 23% in the 2021 survey. Of the majority of companies, 74%, that plan to give bonuses this year, 81% are keeping the value the same as last year.

Also, 31% of those giving bonuses said they did so at other times of the year. The survey found 29% of respondents plan to award a nonmonetary or nominal award, down from 35% who said so at the same point of 2021.

“Last year, employers needed to step up incentives to retain their employees, hence the increase in value of bonuses,” Challenger said. “But that situation has flipped somewhat as we enter 2023.” Retail Inventories Rise

New Commerce Department numbers show the effects of a supply chain that improved significantly over the past year, but underscore declining demand from businesses and consumers for some types of goods and services.

U.S. retail inventories totaled $738.7 billion in value at the end of November, up 1% from the prior month and a boost of 18.4% from a year earlier, the government reported Tuesday. That followed a Friday report that consumer spending rose 0.1% from the prior month in November, declining from the 0.9% growth rate seen in the prior month amid stubbornly high inflation.

Wholesale inventories at the end of November totaled $933.6 billion, up 1% for the month and 21% above the year-earlier level.

The nation’s international trade deficit was $83.3 billion in November, down from $98.8 billion in October, the government reported. The U.S. was still importing goods more than exporting them, by a dollar count of $252.2 billion to $168.9 billion, both down from the prior month in a sign of slowing global demand for U.S. products.

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