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Inflation Remains Tame09-07-10 | News

Inflation Remains Tame

Early signs show the rental market may be improving. The rentership rate - the percentage of households renting - has risen in each of the past three quarters. Meanwhile, the rental vacancy rate in the second quarter improved for new construction and held steady for older apartments. - Courtesy of Houserentalonline.info

Weak economic growth is helping to keep inflation in check. The seasonally adjusted monthly Consumer Price Index (CPI) rose 0.3 percent in July following three months of decline, and was up 1.2 percent from a year earlier. Meanwhile, core inflation - excluding food and energy prices - rose a modest 0.9 percent from a year earlier.

The low rate of inflation gives the Federal Reserve the room to maintain its expansionary monetary policy and to keep mortgage rates low.

The rental component of the CPI rose 0.1 percent in July for the third consecutive month, though it was down 0.7 percent from a year earlier. Homeownership prices - which are measured by using an owner?EUR??,,????'?????<

The rent and owner components of the CPI make up 32 percent of the CPI. The soft rental market and excess vacancies have kept rents from rising, which has been a challenge to apartment owners who have seen other costs rise. It also has made it more difficult for multifamily projects to obtain financing.

Weakness in construction pushed the prices of residential construction building materials down 0.7 percent in June and 0.2 percent in July. Nonetheless, they were still up 3.7 percent in July from a year earlier. Lumber, gypsum, cement and copper prices were all down in July, helping builders keep new home construction affordable.

- Courtesy of NAHB