|
Inflation Clouds Housing Outlook
Greetings!
Prices picked up again in September, and not in a way consumers will welcome. The Consumer Price Index rose 0.6% for the month—the largest monthly increase in five months—and 3.7% from a year earlier.
Energy did much of the damage. Gasoline prices jumped 9.1% in September and were up 34% from a year ago as conflicts in Iran and Ukraine disrupted energy supplies and refineries. Anyone filling a gas tank probably didn’t need a government report to know something had changed. Because diesel powers the trucks, trains and ships that move goods around the country, higher fuel costs will likely show up in plenty of other places too.
Unfortunately, energy was not the whole story. Core inflation, which strips out food and energy, rose to 2.6% from 2.4% in August. That suggests price pressures are still hanging around, with tariffs adding another source of concern as the holiday shopping season approaches.
There is at least some reason not to panic. New York Fed President John Williams said he still sees “disinflationary forces at play” and expects inflation to move much closer to the Fed’s 2% target next year. In other words, September’s report may be uncomfortable, but it does not necessarily mean the longer-term trend has changed.
Buyers Gain More Negotiating Power
For home buyers, though, hotter inflation is one more reason to keep an eye on interest rates. Mortgage rates averaged 6.86% for 30-year fixed loans last month, helping keep existing-home sales sluggish. Sales rose 1.5% from August but were still 2.2% below a year earlier, according to the National Association of REALTORS.
That softer market may give buyers something they have not had much of in recent years: a little more leverage. NAR Chief Economist Lawrence Yun said higher inventory and longer time on the market are improving buyers’ negotiating power, while sellers may need to consider price reductions or other incentives to attract offers.
That doesn’t make higher mortgage rates any easier to swallow, but it does mean buyers may be able to make up some ground through lower prices, seller concessions, or other incentives. Whether you’re planning to buy, sell, refinance, or simply want help negotiating the best possible terms, we’re here as a resource.
| 
