Dow Unchanged as High Mortgage Rates Slow Housing Growth

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

High mortgage rates slowed but did stop home price growth in July. The news was not enough of a surprise to have a noticeable effect on the Dow Jones Industrial Average (DJINDICES: ^DJI  ) . As of 1:15 p.m. EDT the Dow was up 17 points to 15,419. The S&P 500 (SNPINDEX: ^GSPC  ) was up 3 points to 1,513.

There were three U.S. economic releases today.

Report

Period

Result

Previous

Case-Shiller 20-City Home Price Index

July

1.8%

2.2%

FHFA House Price Index

July

1%

0.7%

Consumer Confidence Index

September

79.7

81.8

Today's housing-price data shows the effect of the jump in mortgage rates that started in May.

US 30 Year Mortgage Rate Chart

US 30 Year Mortgage Rate data by YCharts.

While neither home price index showed a decline, both indexes showed slower month-over-month growth. The Case-Shiller 20-City Home Price Index rose 1.8% in July, up 12.4% year over year.

Case-Shiller Home Price Index: Composite 20 Chart

Case-Shiller Home Price Index: Composite 20 data by YCharts.

The FHFA House Price Index rose a seasonally adjusted 1% in July, up 8.8% year over year. The index is now 9.6% below the peak it hit in April 2007 and is currently at the same level as in March 2005. Prices were up across the country except in the South Central regions.

US House Price Index Chart

US House Price Index data by YCharts.

In other news, the Conference Board's Consumer Confidence Index declined in September to 79.7, in line with analyst expectations of 79.5. The Conference Board's director of economic indicators, Lynn Franco, said:

Consumer Confidence decreased in September as concerns about the short-term outlook for both jobs and earnings resurfaced, while expectations for future business conditions were little changed. Consumers' assessment of current business and labor market conditions, however, was more positive. While overall economic conditions appear to have moderately improved, consumers are uncertain that the momentum can be sustained in the months ahead.

Today's data confirms what we have already known. While mortgage rates are higher, they are still near multiyear lows, the housing market continues its slow recovery, and consumers are uneasy about the economy as a whole. None of this information should change your investment process. Stick to your investment plan, keep learning, and remain focused.

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