Inflation Numbers Explained
The housing market is sending mixed signals this September, with strong new home sales, steady existing sales, and inflation data that may not tell the full story. Here’s what you need to know.
New Home Sales Surge in August
New home sales jumped 21% month-over-month and 15% year-over-year in August. Builders are clearly gaining momentum in their communities, and this surge highlights how new construction is filling gaps in housing supply.
Existing Home Sales Beat Expectations
Existing home sales for August slipped by just 0.2% month-over-month—far better than the 1.5% decline analysts expected. Year-over-year, sales are up 1.8%.
Inventory is also beginning its seasonal decline, down 1.3% from July. This trend typically starts in late summer as fewer homes come on the market heading into fall and winter.
Inflation: Breaking Down the PCE Report
The week’s most important release was the Personal Consumption Expenditure (PCE) index, the Federal Reserve’s favorite inflation gauge.
- Headline inflation: +0.3% month-over-month, 2.7% year-over-year.
- Core inflation (excluding food and energy): +0.2% month-over-month, 2.9% year-over-year.
The Fed’s target is 2%, meaning inflation still looks too high. But here’s where the numbers get tricky.
What’s Skewing Inflation Data?
- Tariffs – Add about 0.3% to inflation.
- Shelter costs (owner’s equivalent rent) – A subjective measure, adding another 0.3%.
- Portfolio management fees – Appear higher only because portfolios have grown with the stock market, not because fees increased. This adds another 0.3%.
Without these skewed factors, inflation would be close to the Fed’s 2% target. Unfortunately, policymakers often react to backward-looking data, making it harder for markets to adjust smoothly.
Community and Realtor Events
🎉 Fall Fiesta – November 13th
Join us for live music, an open bar, endless tacos, and a great cause. We’re raising $10,000 for Community Food Share, a nonprofit serving Boulder and Broomfield Counties.
🍴 Realtor Luncheons: Winning with Objections
Our popular Realtor series continues, with upcoming events in Boulder (next week) and Denver (the following week). Past luncheons have sold out quickly, so RSVP soon to secure your spot.
Bottom Line
The housing market remains resilient, with new construction leading the charge and existing sales holding firm. Inflation appears higher than it really is, thanks to flawed data inputs, but the Fed is still keeping its eyes on the rearview mirror.
If you’re thinking about buying, selling, or refinancing, it’s a great time to review your options. I’m available seven days a week, 8am–8pm. Let’s talk strategy.
– Brian Manning
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