The housing sector continues to be bright, as Existing Home Sales in October reached their best level since September 2013. Low home loan rates and a slowly improving job market are two key factors that drove buyers.
Building Permits, a sign of future construction, also reached their best levels since November of last year, as the National Association of Home Builders (NAHB) reported its November Housing Market Index rebounded to 58, up four points from October. The NAHB Housing Market Index gauges builder perceptions of current single-family home sales, and readings over 50 are seen as positive.
And there’s good news for our economy overall. After our dismal Gross Domestic Product reading at the beginning of this year, economic growth picked up in the second and third quarters thanks to an improving job market. Consumer sentiment also hit a 7 1/2 year high in November.
But there is something to keep an eye on as we head into 2015. While inflation on the consumer side via the Consumer Price Index remained tame in October, wholesale inflation came in hotter than expected. One month certainly doesn’t constitute a trend—and expectations are for inflation to remain cool. But remember that inflation is bad for Bonds, as it impacts the value of fixed investments like Bonds. This means inflation can also cause home loan rates to worsen, as home loan rates are tied to Mortgage Bonds.
In the meantime, home loan rates continue to remain attractive compared to historical levels, and now is a great time to consider a home purchase or refinance. As always, please let me know if you have any questions!