Economists' Outlook

Housing stats and analysis from NAR's research experts.

Latest Consumer Price Inflation

  • Inflation is slowly and steadily picking up. Rents in particular are rising at a 4 percent annualized rate. The sluggishness in new home construction assures that rent and the broader consumer price inflation will likely be on an upward trend.
  • In June, CPI inflation was up 2.1 percent. Such a rate is a tad higher than what the Federal Reserve likes to see. If sustained or even pick up to a higher pace, then the Fed will have no choice but to raise interest rates sooner than planned.
  • One consistent driver of inflation has come from the housing component. Rents are up 3.2 percent from one year ago, the highest in 5 years. Rents on an annualized basis have been trending at 4 percent growth rate for the 4 consecutive months. Such an increase will push up the overall CPI inflation given that the housing component is the biggest weight on the index.
  • Home prices according to the Case-Shiller index have been rising at a double-digit rate of appreciation even though NAR’s median home prices are rising now by 4 percent. But home price is not considered part of CPI inflation just as the stock market prices are not included. What is included is something fuzzy called the homeowner equivalence rent – which measures what a homeowner would hypothetically charge to rent out their owner-occupied home. No sane homeowner computes this. However, there are government employees who do this for you. And this homeowner equivalency rent has been rising at 2.6 percent. Given that renters are facing stronger inflation, it seems inevitable that this figure will accelerate higher in the upcoming months.
  • One other noteworthy price is the price of energy. Consumer energy prices, including gasoline, are up 3.1 percent. But crude oil prices are up more strongly at 10 percent (West Texas Oil). So there could be stronger consumer energy prices in the near future.
  • Some countries’ economies are heavily dependent on oil. If oil prices were to fall meaningfully then it can ruin the country’s economy. Russia is one. The last oil price collapse was in the mid-1980s, which precipitated the eventual collapse of communism. If oil prices were to go down to $75 per barrel, Putin is likely to be history.

Capture

hhhhh

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.

Advertisement

Comment Policy

The opinions expressed in reader comments sections on this website are those of the reader and not NAR or REALTOR® Magazine.

About Economists' Outlook

Visit this blog daily to see what NAR experts are saying about the economy, the housing market, and other factors that will impact your business.

Housing Minute

Housing Minute is a monthly video series highlighting the latest housing data from the National Association of REALTORS® in a minute or less.