Optimism in the new home market is high, according to the National Association of Home Builders’ Housing Market Index. The index rose 2 points for August, bumping the index to the 60 level for the second time in 2016, according to Bloomberg. While builders showed gains in present and future sales, traffic continues to be a concern, especially first-time homebuyers.
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Housing starts are continuing to show strength, but permits remained flat in July. Starts increased 2.1 percent to a 1.211 million annualized rate following June’s 5.6 percent surge. Single-family starts increased 0.5 percent and multi-family homes increased 5 percent.
The Consumer Price Index report came in unchanged for July due to a 1.6 percent monthly decline in energy prices and flat food and transportation prices. The core CPI excluding food and energy was up only 0.1 percent month-to-month and year-over-year dipped 0.1 percent to 2.2 percent.
Two pricing categories, medical and housing, jumped last month. Medical care increased by 0.5 percent from June, with the highest year-over-year lead of 4.0 percent. Housing is the second highest major reading with a year-over-year difference of plus 2.4 percent.
The minutes from the Fed’s July meeting were released on Wednesday and suggested that a bump in short-term interest rates is a possibility as early as next month, but the Fed wants to form a stronger agreement about the position of economic growth, hiring and inflation.
Last week in the economy:
- Purchase applications fell 4.0 percent in the August 12 week, accounting for the fourth decline over the last five weeks. The purchase index is at the lowest level since February. Year-over-year the index slipped 3 points but is still strong at plus 10 percent. Refinance applications also decreased by 4.0 percent.
- Initial Jobless Claims fell by 1,000 in the August 6 week to 266,000. The 4-week average is up 3,500 to a level of 262,750.
- Bloomberg’s Consumer Comfort Index bounced back to 43.6 after fall over 1 point in the August 7 week. This index is extremely volatile, but overall, the index indicates positive attitudes amongst consumers.
What’s on economic calendar for the week of August 22, 2016:
- Tuesday – New Home Sales
- Wednesday – MBA Mortgage Applications, FHFA House Price Index, Existing Home Sales
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
- Friday – GDP, Consumer Sentiment
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