The costs of places where we live and the way we get around are again driving up the cost of living along the Wasatch Front. The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.8 percent from May to June, primarily due to rising prices in transportation and housing. Year over year, the CPI has grown 3 percent — but the growth slowed for the fourth consecutive month.
Nationally, the Consumer Price Index has increased 1.6 percent since June of last year.
Transportation prices jumped 2.6 percent in June, due almost entirely to increases in vehicle prices. While vehicle prices typically go up in June as newer models replace older models, transportation prices are down 1 percent from June 2018, a result of lower insurance rates and slightly lower gas prices.
Housing prices rose 0.8 percent in June. The jump is unusual, not just because it is a higher-than-average month-to-month increase, but also because housing prices typically dip slightly in the month of June. The 0.8 percent surge, due almost entirely to rising apartment rental rates, is the largest seen in the month of June since 2014. The 12-month change in housing prices rose to 5.3 percent from 4 percent in May 2018, ending the six-month streak of lowering year-over-year price increases.
“Interest rates can significantly affect how much home buyers pay for their mortgage,” said Scott Anderson, president and CEO of Zions Bank. “We expect the recent drop in interest rates to have a positive effect on home prices for homeowners across the Wasatch Front.”
Similarly, sinking interest rates could be good news for renters, if the state can keep up with housing demand.
“In terms of renting, we generally expect rental rates on apartments to decrease with the drop in interest rates, as some buyers are able to purchase a home, rather than rent,” said Randy Shumway, chairman and partner of Cicero Group, a Salt Lake City research firm that does data collection and analysis for the CPI. “But we are seeing something different in Utah currently, likely due to Utah’s current imbalance between housing demand and supply. For most of the past 10 years, homebuilders in Utah have accelerated their pace of building, but there continues to be a gap between need and housing stock.”