CPI increases 0.5% in June, Core CPI 0.2%

From the Bureau of Labor Statistics (BLS): Consumer Price Index - June 2013

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in June on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment. The gasoline index rose sharply in June and accounted for about two thirds of the seasonally adjusted all items change.
...
The index for all items less food and energy increased 0.2 percent in June, the same increase as in May.
emphasis added

On a year-over-year basis, CPI is up 1.8 percent, and core CPI is up also up 1.6 percent.  Both are below the Fed's target. This was close to the consensus forecast of a 0.4% increase for CPI (due to gasoline prices), and a 0.2% increase in core CPI.

Note: CPI-W (used for cost of living adjustment, COLA) is also up 1.8% year-over-year in June.  The COLA is calculated using the average Q3 data (July, August, and September).

I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

Tuesday: CPI, Industrial Production, Homebuilder Confidence

And the Q2 GDP forecasts are lowered again following the weaker than expected retail sales report ...

Via the WSJ:

RBS lowered its forecast for the nation's economic growth rate in the second quarter to a weak 0.5% from 0.8%

Steve Lisman via CNBC:

[W]e just calculated using about eight estimates that have been changed today. The current GDP forecast for the second quarter, it's now below 1% ... 0.9%. it should actually be a bit lower in there because one guy in there, UBS, up there 1.12%, that's the prior, and that is now down below 1, with the low being 0.3%

Tuesday:
• At 8:30 AM ET, the Consumer Price Index for June will be released. The consensus is for a 0.4% increase in CPI in June and for core CPI to increase 0.2%.

• At 9:15 AM, the Fed will release Industrial Production and Capacity Utilization for June. The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 77.7%.

• At 10:00 AM, the July NAHB homebuilder survey will be released. The consensus is for a reading of 52, the same as in June. Any number above 50 indicates that more builders view sales conditions as good than poor.

Weekly Update: Existing Home Inventory is up 18.1% year-to-date on July 15th

Weekly Update: One of key questions for 2013 is Will Housing inventory bottom this year?. Since this is a very important question, I'm tracking inventory weekly in 2013. 

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data was for May).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years. This is displayed on the graph below as a percentage change from the first week of the year (to normalize the data).

In 2010 (blue), inventory increased more than the normal seasonal pattern, and finished the year up 7%. However in 2011 and 2012, there was only a small increase in inventory early in the year, followed by a sharp decline for the rest of the year.

Click on graph for larger image.

Note: the data is a little weird for early 2011 (spikes down briefly).

So far in 2013, inventory is up 18.1%, and I expect some further increases over the next month or two.

It now seems likely that inventory bottomed early this year. 

It is important to remember that inventory is still very low, and is down 10.7% from the same week last year according to Housing Tracker.  Once inventory starts to increase (more than seasonal), I expect price increases to slow.

Report: Home Listed For Sales up 4.3% in June from May, Down 7.3% year-over-year

From Nick Timiraos at the WSJ: Housing Listings Multiply in June

The number of homes listed for sale increased by 4.3% in June to 1.9 million homes, the highest level in the last year, according to data released Monday by Realtor.com. ... Listings typically climb heading into the spring and summer, when housing activity hits a seasonal peak. But inventories appear to be posting larger-than-usual gains in many markets right now as they rise from their lowest levels in at least a decade. ...

Nationally, the number of homes listed for sale stood 7.3% below their levels of one year earlier. The year-over-year decline stood at 18.6% in February, by contrast.
...
The question now is whether higher inventory will lead to higher sales volumes, and whether it will also slow the pace of home-price gains.
emphasis added

Note: Here is the realtor.com site (not updated with June data yet at posting time).

Last month, the NAR reported inventory was down 10.1% from May 2012. That was the smallest year-over-year (YoY) decrease since 2011, and it appears the YoY decrease will be in single digits for June (the NAR reports June sales and inventory next Monday). Tom Lawler's initial estimate is that the NAR will report a 6.3% YoY decline in inventory in June.

My guess is the YoY change for inventory will probably turn positive in September and that inventory bottomed in early 2013.