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Los Angeles Times
5 days ago
- Business
- Los Angeles Times
Gloomy Americans cut back on spending as inflation ticks higher
A key inflation gauge moved higher in May in the latest sign that prices remain stubbornly elevated while Americans also cut back on their spending last month. Prices rose 2.3% in May compared with a year ago, up from just 2.1% in April, the Commerce Department said Friday. Excluding the volatile food and energy categories, core prices rose 2.7% from a year earlier, an increase from 2.6% the previous month. Both figures are modestly above the Federal Reserve's 2% target. The Fed tracks core inflation because it typically provides a better guide to where inflation is headed. At the same time, Americans cut back on spending for the first time since January, as overall spending fell 0.1%. Incomes dropped a sharp 0.4%. Both figures were distorted by one-time changes: Spending on cars plunged, pulling down overall spending, because Americans had moved more quickly to buy vehicles in the spring to get ahead of tariffs. And incomes dropped after a one-time adjustment to Social Security benefits had boosted payments in March and April. Social Security payments were raised for some retirees who had worked for state and local governments. Still, the data suggests that growth is cooling as Americans become more cautious, in part because President Donald Trump's tariffs have raised the cost of some goods, such as appliances, tools, and audio equipment. Consumer sentiment has also fallen sharply this year in the wake of the sometimes-chaotic rollout of the duties. And while the unemployment rate remains low, hiring has been weak, leaving those without jobs struggling to find new work. Consumer spending rose just 0.5% in the first three months of this year and has been sluggish in the first two months of the second quarter. And spending on services ticked up just 0.1% in May, the smallest montly increase in four and a half years. 'Because consumers are not in a strong enough shape to handle those (higher prices), they are spending less on recreation, travel, hotels, that type of thing,' said Luke Tilley, chief economist at Wilmington Trust. Spending on airfares, restaurant meals, and hotels all fell last month, Friday's report showed. At the same time, the figures suggest that President Donald Trump's broad-based tariffs are still having only a modest effect on overall prices. The increasing costs of some goods have been partly offset by falling prices for new cars, airline fares, and apartment rentals, among other items. On a monthly basis, in fact, inflation was mostly tame. Prices rose just 0.1% in May from April, according to the Commerce Department, the same as the previous month. Core prices climbed 0.2% in May, more than economists expected and above last month's 0.1%. Gas prices fell 2.6% just from April to May. Economists point to several reasons for why Trump's tariffs have yet to accelerate inflation, as many analysts expected. Like American consumers, companies imported billions of dollars of goods in the spring before the duties took full affect, and many items currently on store shelves were imported without paying higher levies. There are early indications that that is beginning to change. Nike announced this week that it expects U.S. tariffs will cost the company $1 billion this year. It will institute 'surgical' price increases in the fall. It's not the first retailer to warn of price hikes when students are heading back to school. Walmart said last month that that its customers will start to see higher prices this month and next as back-to-school shopping goes into high gear. Also, much of what the U.S. imports is made up of raw materials and parts that are used to make goods in the U.S. It can take time for those higher input costs to show up in consumer prices. Economists at JPMorgan have argued that many companies are absorbing the cost of the tariffs, for now. Doing so can reduce their profit margins, which could weigh on hiring. Cooling inflation has put more of a spotlight on the Federal Reserve and its chair, Jerome Powell. The Fed ramped up its short-term interest rate in 2022 and 2023 to slow the economy and combat inflation, which jumped to a four-decade high nearly three years ago. With price increases now nearly back to the Fed's target, some economists — and some Fed officials — say that the central bank could reduce its rate back to a level that doesn't slow or stimulate growth. Trump has also repeatedly attached the Fed for not cutting rates, calling Powell a 'numskull' and a 'fool.' But Powell said in congressional testimony earlier this week that the Fed wants to see how inflation and the economy evolve before it cuts rates. Most other Fed policymakers have expressed a similar view. Rugaber writes for the Associated Press.
23-06-2025
- Business
May home sales barely move as high mortgage rates, prices, weigh on housing market
NEW YORK -- Sales of previously occupied U.S. homes edged higher in May, as stubbornly high mortgage rates and rising prices made homebuying less affordable even as the inventory of properties on the market continued to increase. Existing home sales rose 0.8% last month from April to a seasonally adjusted annual rate of 4.03 million units, the National Association of Realtors said Monday. Sales fell 0.7% compared with May last year. The latest home sales fell topped the 3.95 million pace economists were expecting, according to FactSet. 'The sluggish sales activity one can attribute essentially to affordability,' said Lawrence Yun, NAR's chief economist. Home prices increased on an annual basis for the 23rd consecutive month, although the rate of growth continued to slow. The national median sales price rose 1.3% in May from a year earlier to $422,800, an all-time high for the month of May. The U.S. housing market has been in a slump since early 2022, when mortgage rates began to climb from pandemic-era lows. Home sales fell last year to their lowest level in nearly 30 years. The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, which it set in mid-January, according to mortgage buyer Freddie Mac. The low point for this year arrived five weeks ago, when the average rate briefly dropped to 6.62%. Last week, it averaged 6.81%. Homes purchased last month likely went under contract in April and May, when the average rate on a 30-year mortgage ranged from 6.62% to 6.89%. High mortgage rates, which can add hundreds of dollars a month in costs for borrowers, remain a key affordability hurdle for many would-be homebuyers. Years of soaring home prices have helped put homeownership out of reach. The median U.S. home sales price is up 52% since May 2019, while the U.S. median annual income has risen 30% in the same period, Yun noted. While price growth has slowed, elevated mortgage rates and rising prices are forcing prospective homebuyers to save more for a down payment. In May, buyers needed an annual income of $91,960 to afford a typical home with a 20% down payment, or nearly 87% more than in May 2019, according to Home shoppers who can afford to buy at current mortgage rates benefited from a wider selection of properties on the market. There were 1.54 million unsold homes at the end of last month, a 6.2% increase from April, and 20.3% higher than May last year, NAR said. That's still well below the roughly 2 million homes for sale that was typical before the pandemic, however. May's month-end inventory translates to a 4.6-month supply at the current sales pace, up from a 4.4-month pace at the end of April and 3.8 months in May last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.
The Hill
23-06-2025
- Business
- The Hill
May home sales barely move as high mortgage rates, prices, weigh on housing market
NEW YORK (AP) — Sales of previously occupied U.S. homes edged higher in May, as stubbornly high mortgage rates and rising prices made homebuying less affordable even as the inventory of properties on the market continued to increase. Existing home sales rose 0.8% last month from April to a seasonally adjusted annual rate of 4.03 million units, the National Association of Realtors said Monday. Sales fell 0.7% compared with May last year. The latest home sales fell topped the 3.95 million pace economists were expecting, according to FactSet. 'The sluggish sales activity one can attribute essentially to affordability,' said Lawrence Yun, NAR's chief economist. Home prices increased on an annual basis for the 23rd consecutive month, although the rate of growth continued to slow. The national median sales price rose 1.3% in May from a year earlier to $422,800, an all-time high for the month of May. The U.S. housing market has been in a slump since early 2022, when mortgage rates began to climb from pandemic-era lows. Home sales fell last year to their lowest level in nearly 30 years. The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, which it set in mid-January, according to mortgage buyer Freddie Mac. The low point for this year arrived five weeks ago, when the average rate briefly dropped to 6.62%. Last week, it averaged 6.81%. Homes purchased last month likely went under contract in April and May, when the average rate on a 30-year mortgage ranged from 6.62% to 6.89%. High mortgage rates, which can add hundreds of dollars a month in costs for borrowers, remain a key affordability hurdle for many would-be homebuyers. Years of soaring home prices have helped put homeownership out of reach. The median U.S. home sales price is up 52% since May 2019, while the U.S. median annual income has risen 30% in the same period, Yun noted. While price growth has slowed, elevated mortgage rates and rising prices are forcing prospective homebuyers to save more for a down payment. In May, buyers needed an annual income of $91,960 to afford a typical home with a 20% down payment, or nearly 87% more than in May 2019, according to Home shoppers who can afford to buy at current mortgage rates benefited from a wider selection of properties on the market. There were 1.54 million unsold homes at the end of last month, a 6.2% increase from April, and 20.3% higher than May last year, NAR said. That's still well below the roughly 2 million homes for sale that was typical before the pandemic, however. May's month-end inventory translates to a 4.6-month supply at the current sales pace, up from a 4.4-month pace at the end of April and 3.8 months in May last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.
San Francisco Chronicle
23-06-2025
- Business
- San Francisco Chronicle
May home sales barely move as high mortgage rates, prices, weigh on housing market
NEW YORK (AP) — Sales of previously occupied U.S. homes edged higher in May, as stubbornly high mortgage rates and rising prices made homebuying less affordable even as the inventory of properties on the market continued to increase. Existing home sales rose 0.8% last month from April to a seasonally adjusted annual rate of 4.03 million units, the National Association of Realtors said Monday. Sales fell 0.7% compared with May last year. The latest home sales fell topped the 3.95 million pace economists were expecting, according to FactSet. 'The sluggish sales activity one can attribute essentially to affordability,' said Lawrence Yun, NAR's chief economist. Home prices increased on an annual basis for the 23rd consecutive month, although the rate of growth continued to slow. The national median sales price rose 1.3% in May from a year earlier to $422,800, an all-time high for the month of May. The U.S. housing market has been in a slump since early 2022, when mortgage rates began to climb from pandemic-era lows. Home sales fell last year to their lowest level in nearly 30 years. The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, which it set in mid-January, according to mortgage buyer Freddie Mac. The low point for this year arrived five weeks ago, when the average rate briefly dropped to 6.62%. Last week, it averaged 6.81%. Homes purchased last month likely went under contract in April and May, when the average rate on a 30-year mortgage ranged from 6.62% to 6.89%. High mortgage rates, which can add hundreds of dollars a month in costs for borrowers, remain a key affordability hurdle for many would-be homebuyers. Years of soaring home prices have helped put homeownership out of reach. The median U.S. home sales price is up 52% since May 2019, while the U.S. median annual income has risen 30% in the same period, Yun noted. While price growth has slowed, elevated mortgage rates and rising prices are forcing prospective homebuyers to save more for a down payment. In May, buyers needed an annual income of $91,960 to afford a typical home with a 20% down payment, or nearly 87% more than in May 2019, according to Home shoppers who can afford to buy at current mortgage rates benefited from a wider selection of properties on the market. There were 1.54 million unsold homes at the end of last month, a 6.2% increase from April, and 20.3% higher than May last year, NAR said. That's still well below the roughly 2 million homes for sale that was typical before the pandemic, however.
Irish Examiner
14-05-2025
- Business
- Irish Examiner
Personal Insolvency Arrangements to address mortgage debt rise 28%, report shows
There was a 28% increase in the number of court approved Personal Insolvency Arrangements (PIAs) — the insolvency mechanism that address mortgage-related debt — during 2024, as the number of accounts in mortgage arrears 'remains stubbornly high', a new report by the Insolvency Service of Ireland has found. The latest annual report from the ISI said there were 1,189 approved insolvency arrangements during 2024, of which 861 were PIAs — an increase from the 929 recorded in 2023, of which 671 were PIAs. In the report, ISI director Michael McNaughton said the combination of increased living costs and higher interest rates 'continues to put pressure on many households and individuals in meeting their mortgage payments as well as rental and utility bills'. In managing these situations, and through no fault of their own, many people may find themselves burdened with an unsustainable level of debt. Mr McNaughton said although the number of people in long-term arrears has fallen in recent years, 'it remains stubbornly high at around 19,000 accounts', adding that the Abhaile scheme 'continues to serve as a crucial entry point into the insolvency framework'. The Abhaile scheme provides a range of services to help people in mortgage arrears and offers free access to financial and legal advice by way of a voucher. The scheme issued 1,958 vouchers for a free Personal Insolvency Practitioner (PIP) consultation during the year. The report said a representative sample from Abhaile data shows of those borrowers who have availed of a PIA, 100% had terms which saw them remain in their family home, while 28% of borrowers had a reduction in their mortgage debt through a write-down of the principal. The report also showed court-approved Debt Relief Notices, a solution aimed at resolving unsecured debt, increased by 48% to 240 last year compared to the 162 recorded during 2023. A DRN is a solution for people with low income, no mortgage and very few assets that allows for the write-off of debts up to €35,000. During 2024, there were 1,544 new insolvency applications made to the ISI, of which 1,165 were PIAs. The ISI had 1,600 active estates under management in bankruptcy last year. Assets with a value of close to €6.4m were realised across 227 bankruptcy estates last year. The number of people adjudicated bankrupt during 2024 stood at 71 — compared to 72 in 2023. The report also noted 75 people exited bankruptcy during the year. There were 1,344 protective certificates (PC) issued during 2024. A PC is a certificate issued by the court that offers a period of protection to a debtor from creditors when applying for relief. The report noted there has been a 17% increase in approval of PCs since 2022, which it said could be attributed to increasing cost of living and rising interest rates. 'This combination created considerable uncertainty in individuals' personal circumstances and it is expected this will remain a further challenge in 2025,' the report said. Read More Average Irish mortgage rate sixth highest in euro area despite recent fall
