Housing Wins GoldHousing and construction are important sectors because a robust housing market can have a cascade of positive effects through the entire economy. Here’s what’s happening.

New Home Sales surged to a nine-year high due to a strengthening job market and record-low home loan rates — rising an astounding 12.4 percent from June to July. The Northeast led the charge with a whopping 40 percent surge. Sales are also up 31.3 percent when compared to July of last year. The median sale price for a new home dipped 0.5 percent from a year ago to $294,600.

Sales of existing homes had the opposite result from June to July. The National Association of REALTORS® reported sales of Existing Homes declined due to higher prices and low inventories, which are currently at a 4.7-month supply (a six-month supply is considered normal). The median existing home price was up 5.3 percent from July 2015.

Housing Starts, which track new construction, hit the highest level in five months in July, rising 2.1 percent from June. This also marked the second highest Housing Starts rate since the recession. Multifamily units (including condos and townhomes) led the boost. Building Permits, a sign of future construction, fell slightly but were in line with expectations.

Consumers See Losses and Wins The Bureau of Labor Statistics reported wages were down in the first quarter of 2016, revising the previously published increase. Compensation fell 0.4 percent in the first quarter and 1.4 percent in the second quarter. Shrinking wages can cause consumers to tighten purse strings, which strains the economy. Read more about recent news on Retail Sales below.

Both consumer and wholesale inflation remained tame in July. The Consumer Price Index (CPI) was unchanged from June to July. Core CPI, which strips out volatile food and energy, increased just below expectations, rising 0.1 percent compared to June. The wholesale-measuring Producer Price Index (PPI) declined.

Besides being a gauge of price stability, inflation reduces the value of fixed investments, like Mortgage Bonds. This means tame inflation tends to be good news for home loan rates, since they are tied to Mortgage Bonds.

The bottom line is that home loan rates remain near historic lows. If you have any questions about housing or home loan rates, or if you’d like to discuss your unique situation, please call or email today.

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