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Inflation and mortgage rates continue to ease up

The effects of inflation are ravishing the US, but despite big tech layoffs and cancelled home contracts, inflation was down in November.

Person holding money representing the wealthy not buying in baldwisk

Americans have faced a challenging couple of years as inflation has soared to record heights. The Consumer Price Index report was just released, showing a slight cool down in November. Luckily for home buyers, mortgage rates are following suit.

Currently, the rate for a 30-year fixed-rate mortgage sits at 6.28%, which is still exponentially higher than it was in 2021.

“The second consecutive month of reassuring CPI data continues to build a case that inflation has turned a corner, but rates will be careful about reading too much into that potential shift given the volatility of the data in recent months,” says Matthew Graham, COO at Mortgage News Daily.

“The bond market will also want to see what the Fed does with this info in tomorrow’s updated Fed rate forecasts in the dot plot.”

We entered the year with an increase in mortgage rates, with the 30-year rate hovering around 3%, but inflation hit hard by summertime. The massive jump caused the housing market to freeze. According to the National Association of Realtors, sales of existing homes dropped by 5.9% between September and October, down a whopping 28.4% over last year.

Hope for home buyers may be just beyond the horizon, as rates fell in response to the Consumer Price Index. Real estate broker Redfin has reported that interest is increasing, reporting a 1.5% increase since October in demand of home tours and other services. While some market-watchers think that the cooling inflation rate may lure potential buyers back into the market, Doug Yearley, CEO of Toll Brothers Homebuilders, is not jumping the gun.

“There are some very very modest green shoots over the last few weeks, as rates have come down, but I am not ready to get sucked back into the conversation we had in August when we felt better.”

His mention of August is referring to a very short-lived rate drop.  Redfin’s data also proves that we’re far from out of the woods. Searches for “homes for sale” on Google are down 40% from last year. While home touring activities have seen a small uptick, the demand is still down 53% from the beginning of the year.

Federal Reserve Chairman, Jerome Powell, has said that housing inflation is “likely to continue into next year. “But as long as new lease inflation keeps falling, we would expect housing services inflation to begin falling sometime next year.”

Jennifer is a native Houstonian (go Astros!) with a knack for creating digital works of art. She has expansive experience creating content and branded collateral for Fortune 500 companies, as well as small local businesses. When she’s not buried in her laptop, Jennifer is the marketing director for a world championship circuit barbecue cook off team and pet mom to dog (Milo) and Guinea pig (Piggy Smalls).


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