Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Consumer Price Index, September 13, 2022

Consumer prices are still rising too aggressively and will force the Federal Reserve to take an even more hawkish stance to fight them. The overall CPI rose 8.3% from one year ago. It is not the 9.1% or 8.5% seen in the past two months, but this number is higher than expected, given the retreat in gasoline prices. A significant contributor to inflation was rapidly rising rents, which rose 6.7% from a year ago — the fastest growth in nearly 40 years. Rent prices look to accelerate in the near term as rental demand remains exceptionally high from ongoing job additions and higher mortgage rates forcing people out of the home-buying market. The one-month gain in rent was 0.77%, which translates into a hefty 9.6% annualized rent gain. Increasing the housing supply will lessen the pressure of inflation.

With hourly earnings rising by much less at 5.2%, the standard of living for many Americans is falling. In addition to falling real inflation-adjusted income, the decline in the stock market has dented overall net wealth. It has fallen by $6 trillion from the first to the second quarter. Only housing wealth has held on, with homeowners' real estate wealth (home value minus mortgage balance) rising by $1.2 trillion. Too much spending with inadequate supply causes inflation.

Line graph: CPI Change and Rents, January 2021 to August 2022
Line graph: CPI Change and Wages, January 2021 to August 2022
Line graph: Total Household Wealth and Real Estate Wealth, Q1 2021 to Q2 2022