Pensacola Beach Florida Real Estate

———————–
Chart: Housing Starts in August

Inflation was also in the news last week. On Tuesday, the Producer Price Index came in more than double expectations, prompting fears of wholesale inflation. However, since wholesale inflation isn’t always passed on to consumers, the markets anxiously awaited the Consumer Price Index (CPI). CPI is an important measurement of inflation because it actually measures the average prices paid by consumers for goods and services, which is where the real inflation concerns come in. According to last week’s report, CPI came in just slightly higher than expectations.

Remember, inflation is the archenemy of Bonds and home loan rates, and it is said that “rates are the boat that floats on the sea of inflation”, meaning when inflation rises, home loan rates will move higher as well. With the recession appearing to be bottoming out and with an unprecedented amount of government spending over the past year, there are fears that inflation – and therefore home loan rates – may be on the rise soon. If you are in the market to purchase or refinance, this is an important aspect to keep an eye on. Call me if you want to discuss presently low rates, and how they might fit into your plans.