Home borrowing costs declined in the latest week and remain at historically low levels. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell to 3.11% from 3.18% with 0.32 in points for the week ended May 7, 2021. The Market Composite Index, a measure of total mortgage loan application volume, rose 2.1%, while the Purchase Index saw a small gain of 0.8%. The Refinance Index was up 3% and is down 12% from a year ago. Spokesperson Joel Kan said, "Most markets this spring continue to see robust demand, but activity continues to be constrained by insufficient inventory levels, as well as homebuilder challenges related to the ongoing shortages and price increases for building materials."
Consumer inflation heated up to its fastest monthly pace since 2009 as pent-up demand surged. The April Consumer Price Index (CPI) jumped by 0.8% from March led by rising prices for used cars and food. The annual CPI jumped by 4.2% from 2.6% in March, well above the 3.6% expected and the highest level since 2008. When stripping out food and energy, the Core CPI rose 0.9% versus the rise of 0.3% expected. Annual Core CPI rose to 3%, the highest in 26 years.