House Prices, Tight Labor Market, Memorial Day Travel
May 23, 2016
Monday – May 23
Freddie Mac reported last week that despite low mortgage rates, rapidly rising house prices and tight inventory make affordability and availability major challenges for would-be homebuyers. In the latest Freddie Mac House Price Index it revealed that first quarter 2016 house price appreciation grew by 1.4%. Over the past 12 months, prices have increased 5.8% nationally. Freddie Mac went on to say that home prices are forecasted to rise by 4.8% in 2016 and 3/5% in 2017.
Outspoken St. Louis Fed President James Bullard said today the he sees the tight labor market putting upward pressure on inflation, which is laying the case for a hike in the benchmark Fed Funds Rate in June or July. Mr. Bullard said that the rise in rates will still be dependent upon incoming economic data in its determination as to when the U.S. economy may be ready for the benchmark Fed Funds Rate to begin rising. A rate hike will be determined by an improvement in the economy, further strengthening of the labor markets and evidence that inflation is moving towards its target rate of 2%.
Despite the recent rise in gas prices, motorists will be looking at the lowest prices in 11 years when they take to the roads this Memorial Day weekend. This Memorial Day weekend, it is estimated that 34 million Americans are planning a road trip to their favorite destinations. The national average price for a regular gallon of gasoline is $2.28, which is below the $2.74 seen last year this time. A AAA spokesperson said, “Gasoline demand continues to test record levels, and a repeat of last year’s higher-than-normal summer driving season is likely on the horizon.”
