Inflation hits a 40-year high
The core consumer price index (CPI), which doesn’t account for food or energy prices, increased 0.6% from last month and 6.6% from last year—hitting the highest level since 1982. Meanwhile, the overall CPI rose 0.4% in September and 8.2% from a year prior, with shelter, food and medical care contributing to a large part of the increase.
But it’s not all doom and gloom. September numbers reflect a resilient labor market, with the unemployment rate hitting a five-decade low and businesses attempting to meet employer’s needs through compensation.
Building materials prices come down
While we’ve been hearing all about rising costs across the nation, the Producer Price Index (PPI) reported a 0.3% decrease in the price of building materials in September. September also brought a third consecutive month of declines (-0.1%) to the PPI for goods inputs to residential construction—falling 2.3% since June which is the largest three-month drop since April 2020.
But because of building materials wholesalers’ margins and freight transportation prices, services prices continue to decline. Though even after six months of declines, the PPI for services inputs to residential construction is 3.3% higher than it was this time last year.
Where have all the starter homes gone?
You know those cute, smaller-sized homes that used to attract first-time buyers, new families and so forth… A combination of shifting buyer preferences and more expensive land have attributed to their dwindling presence.
Many homeowners are renovating existing starter homes, and some builders are turning their focus to larger residential construction projects, abandoning some of the entry-level homes of the past. And while land is getting more expensive, many families in the market for more modest homes aren’t able to afford the high cost of land that comes with them. Instead, developers are sweeping these homes up and building even more expensive homes to recover the cost of land.
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