Square Peg Round Hole
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The Mortgage Bankers Association (MBA) is
projecting a decline in new home sales for June, putting them significantly
behind those in June 2017. MBA's Builder Applications Survey (BAS) shows mortgage
applications for the purchase of newly constructed homes were down 12 percent
from May and 8.8 percent year-over-year. The survey's results are not adjusted
to reflect seasonal patterns.
for new home purchases fell in June, both compared to last year at this time
and relative to May, which fits the seasonal pattern. So far this year, new
home applications are up 2.5 percent relative to the first 6 months of 2017.
Our sense is that builders remain constrained by the tight job market for
construction labor and rising input costs, particularly lumber costs," said
Mike Fratantoni, MBA Chief Economist and Senior Vice President of Research and
While the Labor Department's Employment Situation Report for
June showed wages plodding along at a 2.7 percent annual increase, unchanged
from May, it is still being outstripped by rising costs, especially for housing.
Today's Consumer Price Index (CPI) report shows consumer costs overall were up 2.9
percent with the shelter portion rising 3.4 percent over the last 12 months.
is one of the categories in the CPI's "market basket," the goods and services
that the Bureau of Labor Statistics (BLS) considers necessary for day-to-day
living. The CPI does not include housing
units which it views as capital or investment rather than consumption
items. Shelter is viewed as a "service" provided
by that investment and is thus a consumption item.