The National Association of REALTORS® chief economist, Lawrence Yun, stated that Inflation eased slightly in July, which could bode well for the housing market in the months ahead. Overall, inflation slowed from 9.1% in June to 8.5% in July, but prices for food and rent continued to climb, according to the Bureau of Labor Statistics’ Consumer Price Index (CPI).
Yun also stated that the level of inflation is “still high and uncomfortable but may indicate the start of a steady retreat.” Still, the slight deceleration suggests that consumer price inflation may have peaked, which suggests that mortgage rates also may have peaked,” Yun says.
Rents continued to rise in July, up 6.3% compared to a year prior, the CPI showed. “That is a testament to the ongoing housing shortage,” Yun says.
Yun thinks that the worst of sky-high inflation be behind Americans. “If there is a sustained decline in gasoline prices and more production of apartments and single-family homes, consumer prices will pull back, encouraging the Federal Reserve policy to be less aggressive,” Yun says. “Mortgage rates will fall.”
In August, the 10-year Treasury yield stood at 2.7%. “That should translate into 30-year mortgage rates pulling back to under 5%,” Yun says. “Some recent potential home buyers who were pushed out of the market may now be able to get back in and qualify for a mortgage.” Yun recommends looking at the 10-year Treasury bond rate rather than the federal interest rate, since the mortgage rate is essentially priced off the 10-year Treasury.
Lauren Bunting is a licensed Associate Broker with Keller Williams Realty of Delmarva in Ocean City, MD.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
