The latest inflation data reveals key trends that may impact homeowners and prospective buyers. Here’s a straightforward analysis of what the numbers mean and how they could influence the housing market.
What Happened? (
On November 13th, the U.S. government released the latest Consumer Price Index (CPI) report for October, which measures inflation—or how much prices have gone up for everyday goods and services.
Here’s the scoop:
• Prices increased by 0.2% in October compared to the previous month, which has been the trend for the past three months.
• Over the past year, prices are 2.6% higher, up slightly from the 2.4% increase we saw in September.
When you exclude volatile items like food and gas (called the Core CPI), prices rose 0.3% in October and 3.3% over the past year. This tells us inflation is still there, but it’s not spiraling out of control.
Why Does This Matter?
Good question! Inflation affects the economy in many ways, and one of the biggest is its impact on interest rates. The Federal Reserve (think of them as the referees of our economy) uses interest rate changes to keep inflation under control. If inflation is high, they’re more likely to raise rates. If inflation is steady, they might leave rates alone—or even lower them.
What Does This Mean for the Housing Market?
Let’s connect the dots:
1. Mortgage Rates Are Influenced by Inflation
If the Federal Reserve keeps interest rates high to fight inflation, mortgage rates also tend to stay higher. That means homebuyers could see more expensive monthly payments. But if inflation slows down, we might see those mortgage rates drop in the future.
2. Sellers Should Watch the Market Closely
With higher mortgage rates, buyers might be more cautious, so pricing your home competitively is key. If you’re thinking of selling, now might still be a great time—especially if inflation starts to ease and rates come down, bringing more buyers into the market.
3. Buyers Need to Be Strategic
If you’re planning to buy, don’t panic about mortgage rates. A home is still one of the best long-term investments you can make. Plus, there are ways to negotiate, like rate buydowns or refinancing later if rates drop. I can help you explore your options!
What Should You Do?
If you’re a homeowner, a buyer, or someone thinking about jumping into the market, here’s my advice:
• Stay informed. These reports come out monthly and give us clues about where the market is heading.
• Work with an expert. Whether buying or selling, having a realtor who understands the market and can guide you is invaluable (hint: that’s me!).
• Think long-term. Don’t let short-term fluctuations discourage you from making smart decisions. Real estate builds wealth over time, and the right move today can set you up for success tomorrow.
If you have questions about the housing market, inflation, or just want to chat about your goals, I’m here to help. Let’s navigate this market together!
Until next time,
Todd Goforth
Your Trusted Bay Area Realtor
