Existing Home Sales ended 2016 as the best year in a decade.
Limited housing inventory continued to push home prices up in 2016. CoreLogic, a provider of consumer, financial and property information, reported that home prices, including distressed sales, rose 7.1 percent from November 2015 to November 2016. The recent rise in home loan rates and the expectation of higher rates in 2017 could slow home price gains this year, CoreLogic reported.
Inflation Ticks Up
Consumer inflation was up 2.1 percent from December 2015 to December 2016, as reported in the Consumer Price Index. This 12-month increase marks the fastest pace of inflationary growth since the period ending June 2014.
Wholesale inflation also ticked up in December, the U.S. Bureau of Labor Statistics reported. The Producer Price Index climbed 1.6 percent from December 2015 to December 2016, which was the largest 12-month gain since 2014.
Rising inflation is worrisome for homebuyers because it reduces the value of fixed investments like Mortgage Bonds and hurts the home loan rates tied to them.
Home Loan Rates Still Attractive
Home loan rates were able to improve slightly in the first part of January, following the post-election volatility in Stock and Bond markets at the end of 2016. However, positive economic news, rising inflation and transitions under the new Trump administration may provide some headwinds for Mortgage Bonds and home loan rates in 2017. For now, home loan rates remain historically attractive.