Economics

Wasatch Front CPI - December 2018

Housing prices remain the primary driver of price increases while transportation falls for the fifth consecutive month.

Zions Bank Dec 27, 2018

The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.1 percent from October to November on a non-seasonally adjusted basis. Year over year, the Wasatch Front Consumer Price Index has grown 5.2 percent, while the National Consumer Price index has increased 2.2 percent since November of last year.

Rising housing prices made up the vast majority of the price increase in November, with apartment rental rates driving the largest month-to-month increase in housing prices (0.7 percent) seen in any November since Zions Bank began tracking consumer prices in 2010. Food at home prices also grew, as produce prices increased going into winter and as recent concerns for E. coli in romaine lettuce boosted demand for other produce.

Utility and transportation prices declined month over month.  Utility prices dropped 3.5 percent in November due to scheduled seasonal decreases in water and gas rates. Transportation also dropped 0.4 percent in November, marking the fifth consecutive month that transportation rates have fallen.

The majority of the year-over-year increase in Utah prices are, once again, driven by housing and transportation. This continues the trend since August 2017 of both sectors seeing higher-than-average increases. Housing saw its largest year-over-year jump, 8.7 percent, since Zions Bank began measuring in 2010. Transportation increases have reversed in the last few months, but the year-over-year increase is still significant at 7.9 percent.

CoreLogic reported that Utah had the fourth highest year-over-year home price change, well above the nationwide home price change of 5.4 percent. CoreLogic also predicts that year-over-year nationwide home value growth will drop slightly from the current 5.4 percent to 4.8 percent in the next 12 months.

“Utah’s strong job market continues to drive real estate prices,” said Scott Anderson, president and CEO of Zions Bank. “Even though the growth rate of housing prices may begin to slow, we anticipate that the state’s rising real estate prices will continue to outpace price growth nationwide.”

Contributing to climbing real estate prices are constraints on development, including availability of land for development, said Randy Shumway, chairman and partner of Cicero Group.

“Housing is a product with long lead time for development,” Shumway said. “The consequence of this is that you tend to have cycles as building lags demand by one to two years. Effects of added supply will not be seen until significant new housing comes online.” 

Analysis and data collection for the Zions Bank CPI and the Zions Bank Consumer Attitude Index are provided by Cicero Group, a premier market research firm based in Salt Lake City. The Zions Bank Utah Consumer Attitude Index will be released on Dec. 27, 2018.

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