Houseflation.
The impact of rising home prices has been felt across most of the country: A recent report from the National Association of Realtors found that 89% of metro areas registered single-family existing home sales prices gains in the fourth quarter of 2024.
That’s partly due to elevated mortgage rates, which have incentivized homeowners who locked in ultra-low rates to stay put, meaning fewer homes have been put up for sale. Chronic underbuilding has also led to a shortage of new homes, driving up prices even further.
Mortgage rates, which have stayed high despite the Fed’s recent rate cuts, have also cut into affordability. The average 30-year fixed mortgage rate was 6.89% last week, according to Freddie Mac. While that’s slightly below the recent peak of 7.04% hit in January, it’s higher than average mortgage rates were for 14 years until 2022.
There have been signs that prices have leveled off in the rental market: The median asking rent fell 0.3% year over year in December to $1,594, according to data from real estate platform Redfin. That’s the lowest level since March 2022.
“Housing is still a big piece of inflation,” Neel Kashkari, president of the Minneapolis Fed, said in an interview with CNBC last week. “We have a lot of confidence looking at the new leases. It takes a couple years for that to roll through the actual inflation data, so that should be helping us bring inflation back down.”
By Samantha Delouya, CNN
