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Mark Hemingway

Mortgage Market Update for July 30th

Tuesday, July 30, 2019 - Article by: Mark Hemingway - Security Financial Services, LLC - Message

Inflation continued to remain tame in June, as evidenced by a key inflation indicator. The Core Personal Consumption Expenditure (PCE), which strips out volatile food and energy, rose 1.6% in June, below the 1.7% expected. The Core PCE is the Fed's favorite inflation gauge and it has set a target range of around 2%. The Fed has said that inflation will continue to run low for several years to come. Inflation can be defined as the overall general upward price movement of goods and services in an economy.

Home price gains continued to cool off in May and have come back down to more sustainable levels. The S&P 20-City Home Price Index rose 2.4% annually in May, down from 2.5% in April and well below the 7% gains seen a year ago. On a national level, the Home Price Index rose 3.4%. On a monthly basis, the 20-City Index rose 0.1%. Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices said, "Among 20 major US city home price indices, the average year-over-year gain has been declining for the past year or so and now stands at the moderate nominal year-over-year rate of 3.1%."

The Conference Board reports that the Consumer Confidence Index in July surged to 135 versus the 125 expected and up from 124 in June. It was the third highest reading since October 2000. Within the report it said that those saying jobs are "plentiful" increased from 44% to 46.2%, while those claiming jobs are "hard to get" declined from 15.8% to 12.8%. "After a sharp decline in June, driven by an escalation in trade and tariff tensions, Consumer Confidence rebounded in July to its highest level this year. These high levels of confidence should continue to support robust spending in the near-term despite slower growth in Gross Domestic Product."

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