CONSUMER PRICES UP DUE TO INCREASED ENERGY COSTS
Consumer prices shot up in July, reflecting higher prices for gasoline and other energy products while output at the nations' factories, mines and utilities slowed sharply.
The Labor Department reported that it’s closely watched Consumer Price Index rose 0.5 percent in July, the biggest increase in three months. In July, overall inflation was driven higher by a big 3.8 percent jump in energy costs.
However, outside of food and energy, prices remained well behaved. The core inflation rate edged up by just 0.1 in July.
EXISTING HOMES SALES DIP, MORTGAGE RATES UP
Sales of previously owned homes dropped 2.6 percent in July as mortgage rates crept up. But even with the decline, sales clocked in at the third-highest level on record.
The latest snapshot of housing activity, released by the National Association of Realtors on Tuesday, suggested that the sizzling housing market may be cooling a bit but nonetheless remains in healthy shape.
U.S. LEADING INDEX CONTINUES TO GROW
The U.S. leading index, a key barometer of economic conditions, rose 0.1 percent to 138.2 (1996=100) in July following a 1.2 percent increase in June, The Conference Board recently reported. Last month, six of the 10 indicators comprising the leading index increased, including unemployment insurance claims, interest rate spread, stock prices, building permits, consumer expectations and orders for nondefense capital goods. Though the growth of the leading index has slowed steadily during the first half of 2005, it continues to signal moderate economic growth in the coming months, according to the report.
CALIFORNIANS SPEND HIGHER PROPORTION OF INCOME ON HOUSING
In California, more than 40 percent of households with mortgages spend more than 30 percent of their incomes on housing costs, a higher share than in any other state, according to a recent study by the Public Policy Institute of California. In addition to higher loan-to-income ratios, many Californians have migrated to lower-cost inland areas.
40-YEAR LOANS IN GREATER DEMAND
Sky-high prices are not preventing cash-strapped consumers from getting the house of their dreams now that lenders are letting them drag out the term of their mortgages to 40 years.
While that seems to be good news for consumers, financial experts say the benefits are far outweighed by higher interest rates, 10 years of extra mortgage payments and a reduction in home equity.
FAST FACTS
Calif. median home price - July 05: $540,900 (Source: C.A.R.)
Calif. affordability index - June 05: 16 percent (Source: C.A.R.)
Calif. highest median home price by C.A.R. region July 05:
Santa Barbara So. Coast $1,325,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region July 05:
High Desert $298,950 (Source: C.A.R.)