5 key mortgage interest rate indicators

What should you look at when deciding where interest rates are headed?

There are hundreds of different reports, charts and news items released every quarter that can help. But Lynn Reaser, chief economist at Bank of America Asset Management Group, says the following ones are particularly useful for mortgage shoppers:

• The core Consumer Price Index -- The federal Bureau of Labor Statistics releases this data every month. The core index measures what consumers are paying for goods and services at malls, grocery stores and other retail locations. Unlike the overall CPI, it excludes food and energy prices, which can bounce around enough each month to distort the overall price trend picture. Buyers should pay attention to the report because it's one of the most important indicators of inflation. High inflation equals high interest rates. Low inflation allows interest rates to fall.
  
  
• Employment Cost Index/Average Hourly Earnings -- These two data sets are also put together by the BLS. The ECI comes out quarterly while the Employment Situation report containing the earnings figures comes out monthly. The ECI measures changes in employee wages, salaries and benefits, while the AHE number shows how worker wages are changing month to month. Both are important because rapidly rising labor costs can force businesses to raise prices to compensate, spurring inflation.
  

• Gross Domestic Product -- This report comes from the Bureau of Economic Analysis, which releases an advance, preliminary and final estimate of each quarter's GDP. GDP is the nation's total economic output for a given 3-month period. When growth is too strong, it can cause demand for goods and services to outstrip supply. That, in turn, allows businesses to charge more, fueling inflation.
  
  
• Advance Retail Sales -- This monthly report, which comes from the Bureau of Cencus, tallies sales at retail stores. It's important because the Federal Reserve Board doesn't want people spending too much too quickly for fear that could cause the economy to overheat, driving inflation.

• New Home Sales/Existing Home Sales -- These two reports come out monthly. New home data comes from the Census Bureau while existing home sales data comes from the National Association of Realtors.. Both reports are important because they measure consumer demand for homes and loans. They also contain information about home prices.