Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Inflation, January 12, 2023

“Inflation has been coming down. Mortgage rates will also, therefore, come down. The latest consumer price index of 6.45% in December is in the sixth consecutive month of deceleration after peak inflation of 9.1% in June 2022. Housing inflation due to rising rents is the one major item still showing acceleration but is soon expected to come down as well. Rents increased by 8.35% in December, its highest reading in more than 40 years. Private sector data in recent months have been pointing to near-zero rent growth in some major cities, and robust apartment construction will raise rental vacancy rates.

The overall inflation of 6.45% is still above the average hourly earnings of 4.6%. Therefore, a good majority of Americans are falling behind in their standard of living. Food prices are up 10.4%, including egg price gains of 60%, a daily reminder of the grind people face. Gasoline prices have fallen by 1% from a year ago, though still up 42% from pre-pandemic levels in March 2020.

The 30-year mortgage rate dropping under 6% is now a distinct possibility. The gate is beginning to open for homebuyers who got shut out in October and November when the rates went above 7%. However, there is still a housing shortage and not enough listings.”

Bar graph: Consumer Price Inflation > Wage January 2020 to December 2022
Bar graph: Rent Growth at Highest Since Early 1980s
Bar graph: National Mediam Home Price Growth January 1980 to January 2022
Bar graph: Inventory of Homes on Market January 2000 to January 2022