The most recent Consumer Price and Producer Price Index Reports have. revealed that the Fed's reduction of the money supply seems to be working as. CPI fell to 7.7% in October from 8.2% in September whilePPI. fell to 5.4%from 5.6%. The waning of inflation has led to a lower 30- year fixed mortgage rate as it averaged 6.61% this past week, a decrease from a 7.08% average a week ago. This data has led to home buyers locking in lower mortgage rates. At last week's average rate of 7.07%, a buyer purchasing a median priced home with a 20% down payment would pay roughly $2,280. At this week's rate of 6.61%, that would drop to $2,174.
While these CPI and PPI figures are positive signs for both the overall economy and home buyers at the moment, people remain uncertain as the volatility in mortgage rates seen throughout 2022 is expected to remain through the year. Surging inflation has caused many consumers to tighten their belts, which in turn has lowered demand for homes. As demand has decreased, the supply side of the housing market has been forced to adjust. Roughly 20% of homes listed for sale are seeing price cuts as sellers must adjust to a housing market with lower demand. The Fed has also announced that it has not wavered from raising interest rates until their target of 2% inflation has been reached, which will continue to give prospective home buyers pause as the Fed's rate hikes and mortgage rates are closely linked.
https://www.cnn.com/2022/11/17/homes/mortgage-rates-november-17/index.html
Overall, great article. I think it will be quite fascinating to look at how the inflation rate will impact Christmas spending.
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