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Posted On January 16, 2017
It is going to be a short news week with markets closed today in observance of Martin Luther King Jr. Day and no major events scheduled on Friday because of Inauguration Day. Looking ahead there will be important housing numbers released with the National Association of Home Builders’ housing market index, and housing starts and building permits. The consumer price index is scheduled for release Wednesday morning.
The consumer price index measures any change in the average price level of a fixed sample of goods and services purchased by consumers. Monthly changes in the CPI are used to represent the rate of inflation. This week’s report will catalogue the changes in December 2016. Last month the CPI saw a 0.2% increase on a month-over-month basis and a 1.7% increase on a year-over-year basis.
The National Association of Home Builders’ housing market index is a weighted average of respondents’ outlook on present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers in new homes. For December 2016, the housing market index was recorded at 70, the highest reading in 11 years. The reading was attributed to a post-election confidence boost.
Housing starts and building permits are used to forecast the health of the housing market. In November, housing starts dropped 18.7% and building permits were down 4.7%. Economists had forecasted a decline, but November’s drops exceeded predictions. Numbers may rebound this month based on the unprecedented confidence reported in the home builders’ index.
Most forecasters predict higher rates for 2017 based on the rate spike following the election and the Federal Open Market Committee’s rate hike. However, policy change takes time and economic growth may not occur with the rapidity needed to raise rates.