Housing prices took a major dip from August to September, causing the Zions Bank Wasatch Front Consumer Price Index (CPI) to drop 0.4 percent. While most prices rose slightly in September, prices in the housing sector fell 1.6 percent — the largest single-month drop for the sector since Zions Bank began measuring consumer prices along the Wasatch Front in 2010.
Year over year, the CPI has grown 2.9 percent, while the national Consumer Price Index has increased 1.7 percent since September of last year.
Also contributing to a drop in housing sector prices, the cost for hotels and motels rooms had its largest month-to-month decline ever recorded, falling 13 percent in September. Meanwhile, apartment rental rates dipped 0.9 percent in the same period.
Growth in housing prices seems to be moderating since its peak in December 2018. Year-over-year price growth for housing is now at 3.3 percent, the lowest annual rate for the sector since April 2018. Even so, housing remains the largest driver of the overall annual increase in prices along the Wasatch Front.
Builders are currently planning to build more residential units across the Wasatch Front than at any other time, according to the Ivory-Boyer Construction Database, which tracks building permits issued in Utah. Through August of this year, builders have received permits to build 13,560 housing units across Weber, Davis, Salt Lake and Utah counties. That is higher than the record-setting 13,119 units permitted through August of last year and the previous record of 12,003 units set in 2006. Additionally, plans to build multifamily units have outpaced detached, single-family units.
According to Randy Shumway, chairman and partner at Cicero Group, a Salt Lake City research firm that does data collection and analysis for the CPI, there are good indications that housing supply is starting to catch up to pent-up demand. “The fact that builders are rapidly bringing so many units to the market and that housing prices appear to be moderating, signals that prices will be friendlier for future home buyers,” he said.
Even with the moderation in housing prices, Utah’s job market is one factor that will continue to push housing demand and economic growth, said Scott Anderson, president and CEO of Zions Bank. “Utah has had sustained job growth across sectors,” he said. “That is a solid indicator that our economy is strong and will continue to attract workers and businesses.”