“Home. Home on the range. Where the deer and the antelope play.” (Bing Crosby) A discouraging word was heard by many potential homebuyers, as home prices continue to rise across much of the country.

CoreLogic Home Price Insights ReportResearch firm CoreLogic reported that home prices, including distressed sales, rose 6.8 percent from June 2017 to June 2018. Prices were up 0.7 percent from May to June. However, gains could slow over the next year if further increases in home prices and home loan rates erode affordability. CoreLogic forecasts a 5.1 percent increase in home prices from June 2018 to June 2019.

The National Association of Home Builders also reported that rising home prices and higher home loan rates caused housing affordability to hit its weakest level in a decade in the second quarter of this year.

There was news on consumer inflation, as the July Consumer Price Index (CPI) rose 0.2 percent from June, which was in line with estimates. Core CPI, which strips out volatile food and energy prices, also matched estimates with a 0.2 percent monthly increase. While these monthly numbers were tame, on an annual basis Core CPI rose 2.4 percent when compared to July 2017, which was the largest 12-month increase since the period ending September 2008.

Inflation at the wholesale level was tame in July, as the Producer Price Index was unchanged from June.

The bottom line when it comes to inflation is that fixed investments like mortgage bonds lose value when inflation rises. Home loan rates are tied to mortgage bonds, so rates can tick up when mortgage bonds worsen. That’s why inflation reports are always some of the most important to monitor.

For now, home loan rates remain attractive and near historically low levels.

Housing, manufacturing and retail sales data could move the markets later in the week.

  • Housing data will be in the spotlight with the NAHB Housing Market Index on Wednesday and Housing Starts and Building Permits on Thursday.
  • Also on Wednesday, look for data on Retail Sales and Productivity.
  • Manufacturing numbers will come via the Empire State Index on Wednesday and the Philadelphia Fed Index on Thursday.
  • As usual, weekly Initial Jobless Claims will be released on Thursday.
  • The Consumer Sentiment Index will be delivered on Friday.

If you or someone you know has questions about home loans, please reach out. I’m here to help.

Related Articles

U.S. bond yields and home loan rates ticked modestly higher this week as the world watches the U.S. and China have their first serious talk since July. There is a growing sentiment that the U.S. and China will agree to some short-term measures like a postponement of tariffs, while the…
Read More of the post Fed Rate Cut Coming — But Don’t Wait

Recession fears were back in full swing this past week, thanks to the weakest manufacturing report since June 2009, which was the last month of the Great Recession. Manufacturing makes up 12% of our economy, while consumer spending makes up nearly 70%. So even though the consumer remains strong, markets…
Read More of the post Slowing but Growing

Good news is typically bad news for bonds and home loan rates. That has not been the trend of late, and certainly not this past week. Durable Goods Orders is a report which shows buying demand for products with a life cycle beyond 4 years — think cars, washing machines…
Read More of the post The US Economy Remains “Durable”

The economic data coming out of the US this week showed that not only is a recession highly unlikely anytime soon, but the economy is actually reaccelerating from the slowdown seen last Fall. Back in October and November, the Fed was very hawkish and suggested that three rate hikes would…
Read More of the post Fed Sparks Economic Reacceleration