Inflation continued to rise in August, while price pressures are likely to have peaked. Read on pals, to know the possible outcome this might have on consumer spending.

Mortgage Rates Ascend as Refinance Demand Drops 10%

According to the Mortgage Bankers Association’s seasonally adjusted index, Mortgage demand has been impacted by a substantial increase in mortgage interest rates during the last few weeks as total application volume declined nearly 7% last week compared to the prior week. 

Refinance demand, which is particularly sensitive to weekly interest rate changes, dropped to its lowest in three months last week, down 10% from the previous week. The volume was down 16 percent from the same period a year ago. Mortgage applications for home purchases fell 2% this week.

Study: 24% of sellers received four or more offers in 2021

According to Zillow’s newest consumer housing trends study, about a quarter of property sellers in the United States received four or more offers on their homes in 2021. The higher frequency of bidding wars in 2021 reflects the rise in the number of homes that received multiple offers. The average seller received two bids, which is consistent with the previous three years.

The report, collected by Zillow Group Population Science through a national survey of more than 2,000 sellers, found that the percentage of offers that fell through was slightly higher than in previous years, with 56 percent of sellers reporting that none of the offers on their property fell through, compared to 58 percent in 2020.

U.S. Consumer Spending Increases; Inflation Eroding Households’ Buying Power

In August, consumer spending, which accounts for more than two-thirds of all economic activity in the United States, increased by 0.8 percent. As a result, the data for July was revised to indicate a 0.1 percent decrease in spending rather than the 0.3 percent increase previously reported.

Inflation continued to rise in August, while price pressures are likely to have peaked. After gaining by the same margin in July, the personal consumption expenditures (PCE) price index increased by 0.3 percent, excluding the volatile food and energy components. The so-called core PCE price index grew 3.6 percent in the year to August, mirroring July’s gain. With the August and July statistics in hand, experts anticipated that consumer spending growth in the third quarter would likely slow to approximately 1% in the third quarter

Next week’s potential market-moving reports are:

  • Monday, October 11th – No Reports
  • Tuesday, October 12th – Small Business Index, Job Openings
  • Wednesday, October 13th – Consumer Price Index
  • Thursday, October 14th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, October 15th – Consumer Sentiment Index, Business Inventories

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.