First-time homebuyers led the surge in Existing Home Sales as they realized the dream of homeownership in September.

After two straight monthly declines, Existing Home Sales in September jumped 3.2 percent from August. All major regions saw an increase in closings, as reported by the National Association of REALTORS® (NAR). Limited inventory, however, still plagues many regions of the country. Lawrence Yun, NAR's chief economist, noted, "Unfortunately, there won't be much relief from new home construction, which continues to be grossly inadequate in relation to demand."

September Housing Starts slipped 9 percent from August to the lowest level in 18 months. While multifamily dwellings fell significantly, single-family starts, which account for the largest share of residential housing, surged 8.1 percent. Building Permits, a sign of future construction, beat expectations, rising 6.3 percent from August.

Meanwhile, consumer inflation edged higher in September, though still on the tame side. From September 2015, the Consumer Price Index (CPI) was up 1.5 percent, up from the 1.1 percent annual increase in August. Core CPI, which strips out volatile food and energy, rose 2.2 percent year over year. Inflation trends are key data points to watch. The Fed's inflation target is 2 percent. When inflation rises, it can impact home loan rates since inflation reduces the value of fixed investments like Mortgage Bonds, and home loan rates are tied to Mortgage Bonds.

For now, home loan rates remain near all-time lows. Attractive home loan rates help offset rising home prices, making homeownership or refinancing a distinct possibility for many.

If you or someone you know has any questions , please don't hesitate to contact me.

Forecast for the Week

Gross Domestic Product (GDP) has been running well below normal this year. Friday's reading will tell if this trend continues.

Housing data will be plentiful this week with the S&P/Case-Shiller Home Price Index on Tuesday, New Home Sales on Wednesday and Pending Home Sales on Thursday.

Consumer Confidence and the Consumer Sentiment Index will be released on Tuesday and Friday, respectively.

Durable Goods Orders and weekly Initial Jobless Claims will be reported on Thursday.

On Friday, the first look at third quarter Gross Domestic Product will be reported along with the Employment Cost Index.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds have rebounded slightly in recent days, keeping home loan rates in historically low territory.

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Oct 21, 2016)