If you followed the headlines about home prices every month, you'd be excused for concluding that another bubble is upon us. But you'd be wrong.
An article in today's Wall Street Journal summed up the most recent news by reporting that "home prices rise by 12.4% year over year in August." And this is from the Boston Herald last month: "U.S. home prices climb 12.4% in July."
Is it possible that home prices are rising every month by double digits?
The answer is both yes and no.
As CoreLogic reported this morning, August marked the 18th consecutive month of year-over-year home price gains and the seventh such month of double-digit increases. According to the data provider's monthly home price index, the average price of a house rose by 12.4% in August and is now at the highest level since April 2008.
If you don't read between the lines, however, statistics like this are deceiving. While it's true that home prices grew by 12.4% in August over the same month last year, what matters is how much they are currently growing -- that is, on a month-to-month basis. And that rate is moderating significantly.
As CoreLogic chief economist Mark Fleming said (emphasis added):
Home price gains were negligible month over month in August -- an expected decrease in the pace of appreciation as housing enters the off-season. While prices increased more than 12 percent on a year-over-year basis, the month-to-month change is more telling of this year's late summer trend.
The point is that investors should start to adjust their expectations for stocks that are dependent on home price appreciation, as we're already seeing the slowdown make its way to the bottom lines at the nation's largest homebuilders.
In the most recent quarter, new orders at PulteGroup (NYSE: PHM ) , KB Home (NYSE: KBH ) , and Beazer Homes (NYSE: BZH ) were down by 12%, 9%, and 11%, respectively. While all of their CEOs had generally positive things to say about the state of the housing market, it's hard to argue with the current trajectory of prices.
Nine great dividend stocks
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.