July Sees Home Price Rebound, Slower Appreciation
Due to low inventory, the year-over-year home price increase accelerated in July, increasing by 2.5% nationally after two months of a 1.6% rise. With prices wrapping up July 5% higher than their most recent low point in February, this represented the sixth consecutive month of annual price increases. The price increase for the month was 0.4%. According to CoreLogic’s senior economist, Selma Hepp, the substantial advance in July is due primarily to appreciation from earlier in the year. However, higher mortgage rates prevented further price increases, bringing monthly gains in line with historical seasonal averages. Despite this, the Western U.S. continues to experience severe inventory shortages, which are anticipated to drive up property prices.
Eleven states in the western region saw price declines from the previous year. Vermont enjoyed the most significant annual appreciation at 8.5%, closely followed by New Hampshire, New Jersey, and Maine. Miami led large cities with a 9.0% yearly price increase, followed by Chicago and Washington, D.C. The most notable price drops are witnessed in Las Vegas and Phoenix, where prices increased quickly during the pandemic and are now down 4.8% and 4.2% annually, respectively. Forecasts for price increases have been restrained, particularly in less-affordable sectors, due to the likelihood of persistently increasing mortgage rates.
August Core Inflation Excluding Food and Energy: Up 0.3%, Surpassing Expectations
Due to rising energy and other commodity costs, August saw the most considerable monthly increase in U.S. inflation this year. The Consumer Price Index (CPI) increased by 0.6% for the month, seasonally adjusted, and by 3.7% annually, slightly exceeding economists’ predictions of 0.6% and 3.6%, respectively. The core CPI climbed by 0.3% for the month and achieved a 4.3% year-over-year gain, beating expectations of 0.2% and 4.3%, respectively, when food and energy were excluded. The core CPI is particularly interesting to the Federal Reserve because it provides a more accurate indicator of long-term inflation patterns. This increase in inflation was primarily the result of rising energy prices, mainly a 10.6% increase in gasoline prices. The cost of housing, which makes up a significant portion of the CPI, rose by 0.3%.
Although recent comments from Fed members signal a more cautious approach to future rate hikes, with predictions leaning toward no quick increases at the upcoming meeting, this data corresponds with the Federal Reserve’s efforts to address the persistent inflation issue.
MBA Survey: Mortgage Applications Drop
According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 8, 2023, mortgage applications experienced a 0.8% decrease compared to the previous week. The results for this week were adjusted to account for the Labor Day holiday. The Market Composite Index, which measures mortgage loan application volume, decreased by 0.8% on a seasonally adjusted basis. The Refinance Index also saw a 5% decrease from the prior week. In contrast, the seasonally adjusted Purchase Index increased by 1% from the previous week and was down by 27% from the same week last year.
The report also noted changes in the share of mortgage activity. The refinance share of mortgage activity decreased to 29.1% from 30% the previous week, and the adjustable-rate mortgage (ARM) share of activity increased to 7.5% of total applications. Additionally, the average contract interest rates for various mortgage types increased slightly compared to the previous week. These findings provide insights into the recent trends in the mortgage market, including changes in application volume and interest rates.
Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.