Inflation and New Home Purchase Applications Surge in August
September 16, 2016
Friday – September 16
Inflation at the consumer level edged higher in August led by higher rental, medical and prescription drug costs. The Consumer Price Index rose 0.2% in August above the 0.1% expected. When stripping out volatile food and energy, the so-called Core CPI rose 0.3% versus the 0.2% expected. More importantly, the Core CPI, on a year-over-year basis, was up 2.3%, the tenth straight month over 2%. If inflation continues to push higher, it could lead to higher interest rates from the Federal Reserve.
The Mortgage Bankers Association (MBA) reported this week that new home purchase applications surged 5% in August from July and are up 14% compared to last year. The MBA said that based on its applications data, the MBAs estimate of seasonally adjusted new home sales for August reached 601,000 sales, the highest level observed in its survey since it began in 2012. Lynn Fisher, MBA’s Vice President of Research and Economics said, “While our new home sales estimates have trailed the recent Census data, the increase in our series in August, which derives from a different source of data compared to the Census, provides some corroboration that single family building activity has remained strong even as the summer winds down.”