Economist's Commentary: May 14, 2008

Quick Take on the Economy: May 14, 2008

By Lawrence Yun, NAR Chief Economist

Mortgage applications for home purchase fell 0.7 percent in the latest week from last. The index is down 12 percent from a year ago - much less than the approximate 20 percent decline on home sales.
Refinancing activity rose by 6 percent from a week ago.
Applications on FHA and VA loans have been soaring with activity now 155 percent higher from a year ago.

Consumer prices rose by 0.2 percent during the past month. The 12-month inflation rate is now running 3.9 percent. Still very high, but trending down from above 4 percent in the prior five months.
The core inflation - excluding food and energy - rose by 0.1 percent. The 12-month rise is 2.3 percent. The Fed likes to see this measure slide down to below 2 percent.
Rents on primary residences rose 3.6 percent from a year ago - no change from the prior month. After peaking at 4.6 percent early in 2007, it has been trending down. A competition from a high level of vacant single-family homes has damped the rent growth prospects for apartments.

Consumer prices, though not rising as fast as before, are still rising at a high pace. It is a daily reminder of something not right about the economy. Consumer confidence and sentiment about the direction of the economy has been falling as a result.
Inflation will take time to fully bring it down to more manageable level.
Anticipated rising home sales in the second half can push up renter's rent in 2009.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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