Producer price inflation accelerated to a +0.5% increase in January after a +0.2% increase in December and a -0.1% decrease in November, with the yearly rate up +2.1% to its highest rate since May 2019. A +0.7% increase in final demand service prices accounted for 90% of the monthly increase and final demand goods prices only rose +0.1% for the month. Margins for apparel, jewelry, footwear and accessories retailing rose +10.3% for the month and accounted for 40% of the service increase. Goods prices were held down by a -0.7% drop in energy prices, and excluding the volatile food, energy and trade services sectors, the core producer price index rose +0.4% to its largest monthly increase since April 2019, and to a yearly rate of +1.5%.

New home construction in January slowed to a seasonally adjusted annual rate of 1.567 million units, a -3.6% drop from the previous month, but a +21.4% gain compared to January 2019. Single family construction slowed for the month in the Midwest by -15.1% and in the South by by -12.2%, but this was somewhat offset by gains in the smaller West (+14.2%) and Northeast (+3.1%) regions, limiting the nationwide slowdown in to a -5.9% drop, with the overall single family gain +4.6% for the year. Home completions fell -3.3% for the month to a 1.28 million unit rate, with a yearly gain of +1.5%, but permits for new construction grew +9.2% to an annual 1.551 million rate (+17.9% Y/Y), and are at their highest level since March 2007.

The National Association of Realtors (NAR) reported that home sales fell -1.3% in January to a 5.46 million annual rate, although sales were up +9.6% from January 2019. Home prices were up +6.8% for the year to a median $266,300, marking 95 consecutive months of yearly gains, with a NAR spokesman attributing continuing price growth to a lack of supply. Housing inventory was up +2.2% for the month to 1.42 million units, but down -10.7% for the year, and was at its lowest level since 1999. At the current rate of sales there is a 3.1 month supply of unsold inventory, which is an improvement from December’s 3.0 month supply, but down from 3.8 months a year previously.