October Housing Starts, Inflation rose at consumer level, Mortgage rates highest of 2016
November 17, 2016
The Commerce Department reported on Thursday that Housing Starts in October surged 25.5% from September to an annual rate of 1.323 million units. It was the highest level since September 2007. Within the report it showed that single-family starts, which make up the largest share of the market, jumped nearly 11%, while multi-dwelling starts skyrocketed by 68%. From October 2015 to October 2016, Housing Starts were up 23.3%. Building Permits, a sign of future construction, rose 0.3% from September, to an annual rate of 1.229 million units.
Inflation at the consumer level rose at its fastest pace in six months led by higher costs for gasoline at the pumps. The Consumer Price Index (CPI) rose 0.4% in October from September, which was in line with expectations. When stripping out volatile food and energy costs, the Core CPI rose by 0.1%, which was just below the 0.2% expected. Inflation data is a key metric in the Federal Reserve’s decision on monetary policy and is always a big topic at the Fed meetings.
The post-election Stock market rally pushed investors into riskier assets likes stocks and commodities and out of the safe haven of Bonds. As Bond prices moved lower, mortgage rates have pushed to their highest level of 2106. Mortgage provider Freddie Mac reports that the 30-year fixed conventional mortgage rate ($417,000 or less) rose to 3.94% with 0.5 in points and fees this week. Although mortgage rates hit their highest level this year, they are still are on the low end historically.
