Consumer Price Index rose! Shook the Financial Markets in September, Meantime New Mortgage Applications Experienced a Minor Downward trend Considering Rate Hikes while MBA Sees Job Numbers as Positive for Housing Market

Consumer Price Index

Inflation Increased 0.4% in September, Despite Rate Hikes

In September, consumer prices for a wide range of goods and services increased more than anticipated as rising costs continued to drag on the U.S. economy.

According to the Bureau of Labor Statistics, the consumer price index rose 0.4% for the month, more than the 0.3% Dow Jones prediction. The report first shook the financial markets, sending Treasury rates higher and stock market futures falling as traders increased their expectations for future, more aggressive interest rate increases from the Federal Reserve. However, in the morning trade, the earlier losses were reversed, and by 1:30 p.m., the Dow Jones Industrial Average had risen more than 800 points. ET. 

The cost of food increased significantly, elevating the headline figure. Like August, the food index rose 0.8% for the month and was up 11.2% from the previous year. 

This increase somewhat offset a 2.1% drop in energy prices, including a 4.9% drop in gasoline. According to AAA, the cost of regular gasoline at the pump increased by about 20 cents in October compared to the previous month.

Despite the Federal Reserve‘s intense efforts to rein in price increases and slowdowns in specific important sectors that officials are monitoring, inflation is increasing.

Rates Aside, MBA Sees Job Numbers as Positive for Housing Market

Last week, the number of mortgage applications decreased again, but the reductions were minor compared to the double-digit losses in all indexes on September 30. The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a gauge of the volume of mortgage loan applications, fell 2.0 percent during the week ending October 7 on both a seasonally adjusted and unadjusted basis. The Refinance Index likewise decreased by 2.0 percent from the previous week. At 29.0 percent, the refinance portion of mortgage activity remained constant from last week. The unadjusted and adjusted Purchase Indices decreased by 2.0 percent weekly. 

The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand. However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.

Next week’s potential market-moving reports are:

  • Monday, October 17th – No Report
  • Tuesday, October 18th – NAHB Home Builders’ Index, Capacity Utilization Rate
  • Wednesday, October 19th – Building Permits, Housing Starts
  • Thursday, October 20th – Initial Jobless Claims, Continuing Jobless Claims, Existing Home Sales
  • Friday, October 21st – Index of Common Inflation Expectations

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (800) 216-1047.


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US Housing Prices Fall for First Time Since 2012 Market seeing a great deal of unfulfilled housing demand Homebuyers Relieved By Slightly Lower Mortgage Payments

Cross road

Homebuyers Relieved By Slightly Lower Mortgage Payments

The hot seller’s market is beginning to cool off, helping US homebuyers despite economic headwinds. In August, the national median mortgage payment dropped marginally to $1,839 from $1,849.

According to the Purchase Applications Payment Index (PAPI) of the Mortgage Bankers Association, which gauges how new monthly mortgage payments change over time – relative to income – homebuyer affordability improved for the third consecutive month in August.

The national PAPI decreased to 157.9 in August, a 0.3% decrease from July and an increase of 36.5% from the previous year. As a result, new mortgage payments use an average person’s salary less quickly. The national mortgage payment between July and August 2022 remained constant at $1,210 for borrowers applying for lower-payment mortgages (the 25th percentile).

In August, the median loan amount was $313,500, down from a peak of $340,000 in February, according to Seiler. Edward Seiler, MBA’s AVP of housing economics and executive director of the Research Institute for Housing America.

US Housing Prices Fall for First Time Since 2012

The S&P CoreLogic Case-Shiller index revealed on Tuesday that a national index of prices in 20 major cities dropped 0.44% in July, the first decline since March 2012. The most recent real estate crash ended in 2012, kicking off ten years of price increases that were followed by a two-year pandemic purchasing frenzy.

However, the Federal Reserve quickly ended the celebration in its fight against inflation. Mortgage rates doubled this year, pricing out many potential purchasers and triggering a decline in sales.

Values are currently declining. San Francisco (-3.6%), Seattle (-2.5%), and San Diego (-2%) experienced the most significant month-over-month drops in July.

Yes, prices are still very high. In July, the Case-Shiller national index increased 15.8% year over year. However, it was the weakest advance since April 2021, and the index’s regression from the 18.1% increase in June was the biggest ever.

There are indications that there is a great deal of unfulfilled housing demand. According to government data released Tuesday, new home sales in the US unexpectedly increased in August. The rate of new home sales was at its highest since March, possibly due to purchasers racing to beat additional hikes in borrowing prices and take advantage of price reductions by some builders. All regions saw an increase in new house sales, with the South seeing the most significant increase of 29.4% this year.

Compared to the two-year epidemic frenzy, characterized by many offers and a scarcity of listings that compelled buyers to make giant bids, the falloff appears dramatic. Fewer properties are entering the market, which might help maintain prices high. Due to the decreased demand, postings are now staying on the market longer, increasing the available inventory.

Humor of the Week

I really wish I could find out what happened with my friend that couldn’t pay his mortgage.

You know, just for closure.

Next weeks potential market moving reports are:

  • Monday, October 3rd – Construction Spending
  • Tuesday, October 4th – Job Openings, Quits 
  • Wednesday, October 5th – ADP Employment Report, Pending Home Sales Index
  • Thursday, October 6th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, October 7th – Unemployment Rate, Average Hourly Earnings

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (800) 216-1047.

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Recession Alert?! Housing market NOT in recession! Homebuyers seen to Gain More Bargaining Power in August


Homebuyers Gain More Bargaining Power in August

Homebuyers in several markets have regained some negotiating power as demand has decreased. According to a Redfin survey released on Thursday, the average sale-to-list price ratio decreased to 99.8% over the four weeks ending on August 28.

The research discovered that only 37% of residences sold for more than the asking price, down from 50% a year earlier. Additionally, on average, 7.5% of homes listed for sale experienced a price decrease each week as the previous four weeks.

The median asking price for homes has dropped by 5.8% from the record high set in May to $379,194, reflecting sellers’ efforts to make their properties more engagingly priced. However, compared to a year ago, this asking price is still 9% higher.

Despite the general slowdown, homes are still selling at a reasonably quick pace. The median number of days on the market was 26, slightly longer than a year ago when the market was much hotter. Many homeowners opt not to list their houses since interest from buyers has decreased, and they can no longer command as high of prices.

Strong Job Market Will Continue To Support Housing Demand – MBA


Despite economic challenges, employment opportunities appear to improve as US companies added 315,000 jobs in August. According to the Bureau of Labor Statistics, employment on nonfarm payrolls increased by 315,000 last month, with job growth remaining stable in most industries. The unemployment rate, however, increased by 0.2% to 3.7%.

“The August jobs report revealed that while the labor market remains quite strong, with employment growth still above a sustainable pace; however, that pace is slowing,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “Wage growth is still strong, with average hourly earnings up 5.2% compared to a year ago.”

Health care (+48,000), retail commerce (+44,000), and professional and business services (+68,000) all had significant job growth.

“Coupled with other recent readings, these data indicate an economy that is still growing, but perhaps at an inflection point,” Fratantoni added. “With this in mind, we expect that the Federal Reserve will stay the course with further rate hikes at upcoming meetings.”

Why the Housing Market Is Not In Recession

Fernando Ferreira, a professor of real estate at Wharton, disputes the notion that the American housing market is in recession.

Even though home sales are declining due to higher loan rates, he said there is still a disparity between supply and demand. There is no simple resolution for this mismatch, which is at the root of the present housing crisis in the United States.

Although prices have decreased as a result of the poor sales, as per Ferreira, who is also a professor of business economics and public policy, most Americans still find housing to be prohibitively expensive. According to the National Association of Realtors, the typical sale price of a home in July was $403,800, down $10,000 from a month earlier.

“There’s been a long-term trend of not allowing any new construction, at least not any type of dense construction, on both coasts and in the majority of big cities in the United States,” he said. “Over time, that created this gigantic difference between demand and supply of homes. And to be honest, that’s the main reason [for] these extremely high prices today.”

According to Ferreira, housing prices will only decrease significantly if there is more supply. The only option to expand home-building is to modify rules to permit more and various kinds of construction. He complimented the Texas cities of Dallas and Austin for allowing additional construction, particularly multifamily buildings, to keep up with the rapid population expansion.

Next week’s potential market moving reports are:

  • Monday, September 19 – NAHB Home Builders’ Index
  • Tuesday, September 20 – Building Permits, Housing Starts
  • Wednesday, September 21 – Existing Home Sales, Federal Reserve Statement
  • Thursday, September 22 – Initial Jobless Claims, Construction Spending,
  • Friday, September 23 – No Report

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.


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