[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"$f3o7ndigpuuz8o":3,"$ffeh0925h8cuz":43,"$f2emv3tus0uf1":47,"$fbwk2pqjjqsc7":51},{"item":4,"previous":31,"next":37},{"id":5,"slug":6,"title":7,"description":8,"excerpt":9,"contentType":10,"featuredImage":11,"bannerImage":9,"body":12,"agentsBottomLine":13,"bodyImage":14,"isInfographic":15,"categories":16,"isVideo":15,"videoThumbnail":9,"videoSource":9,"publishedAt":29,"updatedAt":30},15482,"how-inflation-affects-the-housing-market","How Inflation Affects the Housing Market","\u003Cp>Have you ever wondered how inflation impacts the housing market?\u003C\u002Fp>","","blog","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230829\u002F20230831-How-Inflation-Affects-the-housing-market.png","\u003Cp>Have you ever wondered how \u003Ca href=\"\u002F2023\u002F08\u002F03\u002Fhow-inflation-affects-mortgage-rates\u002F\" rel=\"noopener noreferrer\" target=\"_blank\">inflation\u003C\u002Fa> impacts the \u003Ca href=\"\u002F2023\u002F08\u002F04\u002Fhousing-market-forecast-for-the-rest-of-2023-infographic-1\u002F\" rel=\"noopener noreferrer\" target=\"_blank\">housing market\u003C\u002Fa>? Believe it or not, they’re connected. Whenever there are changes to one, both are affected. Here’s a high-level overview of the connection between the two.\u003C\u002Fp>\u003Ch4>\u003Cstrong>The Relationship Between Housing Inflation and Overall Inflation\u003C\u002Fstrong>\u003C\u002Fh4>\u003Cp>Shelter inflation is the measure of price growth specific to housing. It comes from a \u003Ca href=\"https:\u002F\u002Fwww.bls.gov\u002Fnews.release\u002Fcpi.nr0.htm\" rel=\"noopener noreferrer\" target=\"_blank\">survey\u003C\u002Fa> of renters and homeowners that’s done by the \u003Cem>Bureau of Labor Statistics\u003C\u002Fem> (BLS). The survey asks renters how much they’re paying in rent, and homeowners how much they’d rent their homes for, if they weren’t living in them.\u003C\u002Fp>\u003Cp>Much like overall inflation measures the cost of everyday items, shelter inflation measures the cost of housing. And for four consecutive months, based on that survey, shelter inflation has been \u003Ca href=\"https:\u002F\u002Fwww.bls.gov\u002Fnews.release\u002Fcpi.nr0.htm\" rel=\"noopener noreferrer\" target=\"_blank\">coming down\u003C\u002Fa> (\u003Cem>see graph below\u003C\u002Fem>):\u003C\u002Fp>\u003Cp>\u003Ca href=\"\u002Fcontent\u002Fimages\u002F20230829\u002F20230831-Shelter--housing--inflation-pulls-back.png\" rel=\"noopener noreferrer\" target=\"_blank\">\u003Cimg src=\"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230829\u002F20230831-Shelter--housing--inflation-pulls-back.png\">\u003C\u002Fa>Why does this matter? Well, shelter inflation makes up about one-third of overall inflation, as measured by the \u003Ca href=\"https:\u002F\u002Fwww.bls.gov\u002Fcpi\u002F\" rel=\"noopener noreferrer\" target=\"_blank\">\u003Cem>Consumer Price Index\u003C\u002Fem>\u003C\u002Fa> (CPI). So, when shelter inflation moves, it leads to noticeable moves in overall inflation. That means the recent dip in shelter inflation might be a sign that \u003Cstrong>overall inflation could fall in the months ahead\u003C\u002Fstrong>.\u003C\u002Fp>\u003Cp>That moderation would be a welcome sight for the \u003Cem>Federal Reserve\u003C\u002Fem> (the Fed). They’ve been working to get inflation under control since early 2022. While they’ve made some headway (it peaked at \u003Ca href=\"https:\u002F\u002Fwww.bls.gov\u002Fnews.release\u002Fcpi.nr0.htm\" rel=\"noopener noreferrer\" target=\"_blank\">8.9%\u003C\u002Fa> in the middle of last year), they’re still trying to get to their 2% goal (the latest report is \u003Ca href=\"https:\u002F\u002Fwww.bls.gov\u002Fnews.release\u002Fcpi.nr0.htm\" rel=\"noopener noreferrer\" target=\"_blank\">3.3%\u003C\u002Fa>). \u003C\u002Fp>\u003Ch4>\u003Cstrong>Inflation and the Federal Funds Rate \u003C\u002Fstrong> \u003C\u002Fh4>\u003Cp>What’s the Fed been doing to lower inflation? They’ve been increasing the Federal Funds Rate. That interest rate influences how much it costs banks to borrow money from each other. When inflation climbed, the Fed responded by raising the Federal Funds Rate to keep the economy from overheating.\u003C\u002Fp>\u003Cp>The graph below shows the relationship between the two. Each time \u003Ca href=\"https:\u002F\u002Fwww.bls.gov\u002Fcpi\u002F\" rel=\"noopener noreferrer\" target=\"_blank\">inflation\u003C\u002Fa> (\u003Cem>shown in the blue line\u003C\u002Fem>) starts to climb, the Fed \u003Ca href=\"https:\u002F\u002Ffred.stlouisfed.org\u002Fseries\u002FFEDFUNDS\" rel=\"noopener noreferrer\" target=\"_blank\">raises\u003C\u002Fa> the Federal Funds Rate (\u003Cem>shown in the orange line\u003C\u002Fem>) to try to get it back to their target of 2% (\u003Cem>see below\u003C\u002Fem>):\u003C\u002Fp>\u003Cp>\u003Ca href=\"\u002Fcontent\u002Fimages\u002F20230829\u002F20230831-Federal-Reserve-Rate-Actions-and-inflation.png\" rel=\"noopener noreferrer\" target=\"_blank\">\u003Cimg src=\"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230829\u002F20230831-Federal-Reserve-Rate-Actions-and-inflation.png\">\u003C\u002Fa>The circled portion of the graph shows the most recent spike in inflation, the Fed’s actions to raise the Federal Funds Rate to fight that, and the moderation of inflation that happened in response to that hike. As inflation gets closer to the Fed’s current 2% goal, they may not need to raise the Federal Funds Rate much further.\u003C\u002Fp>\u003Ch4>\u003Cstrong>A Brighter Future for Mortgage Rates?\u003C\u002Fstrong>\u003C\u002Fh4>\u003Cp>So, what does all of this mean for you? While the actions coming out of the Fed don’t determine mortgage rates, they do have an impact. As \u003Cem>Mortgage Professional America\u003C\u002Fem> (MPA) \u003Ca href=\"https:\u002F\u002Fwww.mpamag.com\u002Fus\u002Fmortgage-industry\u002Fguides\u002Freasons-why-mortgage-rates-are-going-up\u002F455281\" rel=\"noopener noreferrer\" target=\"_blank\">explains\u003C\u002Fa>:\u003C\u002Fp>\u003Cblockquote>\u003Cem>“. . . \u003C\u002Fem>\u003Cstrong>\u003Cem>mortgage rates and inflation are connected, however indirectly\u003C\u002Fem>\u003C\u002Fstrong>\u003Cem>. When inflation rises, mortgage rates rise to keep up with the value of the US dollar. \u003C\u002Fem>\u003Cstrong>\u003Cem>When inflation drops, mortgage rates follow suit.\u003C\u002Fem>\u003C\u002Fstrong>\u003Cem>”\u003C\u002Fem>\u003C\u002Fblockquote>\u003Cp>While no one can predict the future for \u003Ca href=\"\u002F2023\u002F07\u002F19\u002Fexplaining-todays-mortgage-rates\u002F\" rel=\"noopener noreferrer\" target=\"_blank\">mortgage rates\u003C\u002Fa>, it’s encouraging to see the signs of moderating inflation in the \u003Ca href=\"\u002F2023\u002F08\u002F24\u002Fmore-jobs-and-better-pay-leads-to-more-buyer-demand\u002F\" rel=\"noopener noreferrer\" target=\"_blank\">economy\u003C\u002Fa>. \u003C\u002Fp>","\u003Cp>Whether you’re looking to buy, sell, or just stay \u003Ca href=\"\u002F2023\u002F08\u002F23\u002Fwhy-you-need-a-true-expert-in-todays-housing-market\u002F\" rel=\"noopener noreferrer\" target=\"_blank\">informed\u003C\u002Fa> about the housing market, let’s connect.\u003C\u002Fp>","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230829\u002F20230831-Shelter--housing--inflation-pulls-back.png",false,[17,21,25],{"id":18,"name":19,"slug":20},5,"For Buyers","buyers",{"id":22,"name":23,"slug":24},6,"For Sellers","sellers",{"id":26,"name":27,"slug":28},35,"Mortgage Rates","mortgage-rates","2023-08-31T10:30:00Z","2023-08-31T10:30:53Z",{"id":32,"slug":33,"title":34,"featuredImage":35,"publishedAt":36,"contentType":10,"isVideo":15},15474,"buyer-traffic-is-still-stronger-than-the-norm","Buyer Traffic Is Still Stronger than the Norm","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230824\u002F20230830-Buyer-Traffic-is-still-stronger-than-the-norm.png","2023-08-30T10:30:00Z",{"id":38,"slug":39,"title":40,"featuredImage":41,"publishedAt":42,"contentType":10,"isVideo":15},15489,"homeowners-have-a-lot-of-equity-right-now-infographic","Homeowners Have a Lot of Equity Right Now 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