MetroIntelligence Economic Update by P. DUFFY
46% of homes selling with first two weeks, highest level since 2012
46 percent of homes sold within the first two weeks on the market for the 4-week period ending August 2, the highest level since at least 2012. Home sale prices were up 9 percent year over year to another new all-time high of over $311,000. Pending home sales were up 10 percent year-on-year and have plateaued over the last month, up just 0.2 percent from the four-week period ending July 5. The supply of homes for sale continued to fall, with new listings down 2.7 percent and active inventory of homes for sale down 28 percent year-on-year.
Consumer Price Index rose another 0.6 percent in July, up 1.0 percent year-on-year
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in July (largely to higher gas prices), the same increase as in June, and rose 1.0 percent year-on-year. The index for all items less food and energy – or the ‘core index’ — rose 0.6 percent in July, its largest increase since January 1991, and rose 1.6 percent year-on-year.
Purchase loans rise 2 percent from previous week and 22 percent year-on-year
The Market Composite Index increased 6.8 percent on a seasonally adjusted basis from one week earlier, with purchase loans up 2 percent (and up 22 percent year-on-year), and refinance activity rising 9 percent (and up 47 percent year-on-year) to its highest level since April 2020. The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.06 percent from 3.14 percent.
Producer Price Index rises sharply in July, but down 0.4% year-on-year
The inflation tracker Producer Price Index for final demand increased 0.6 percent in July, following a decline of 0.2 percent in June and an advance of 0.4 percent in May. The July increase is the largest rise since a rise of 0.7 percent in October 2018, but the economy is still far too weak to worry about future inflation. On an unadjusted basis, the final demand index moved down 0.4 percent for the 12 months ended in July. Prices for final demand less foods, energy, and trade services — also known as the ‘core’ index — advanced 0.3 percent in July, the same as in June. For the 12 months ended in July, the index for final demand less foods, energy, and trade services edged up 0.1 percent, following three straight 12-month declines.
July Small Business Optimism Index slips 1.8 points to 98.8
The Small Business Optimism Index fell 1.8 points to 98.8 in July, near the survey’s historical average. Overall, 4 of the 10 Index components improved, 5 declined, and 1 was unchanged. The NFIB Uncertainty Index increased 7 points to 88. Reports of expected better business conditions in the next six months declined 14 points to a net 25%. Owners continue to temper their expectations of future economic conditions as the COVID-19 public health crisis is expected to continue.