Skip to main content

Consumer Price Index Staying Put In October Brings Hope For Falling Mortgage Rates

Christine Stuart
Nov 14, 2023
housing inflation

Economists predict calming inflation could prompt Federal Reserve to consider cutting interest rates, offering relief to loan originators and homebuyers.

The latest Consumer Price Index, which remained flat in October, could have loan originators breathing a sigh of relief because "mortgage rates are plunging with the news of inflation calming." 

That's according to National Association of Realtors Chief Economist Lawrence Yun. 

"Non-official private sector rent data has shown a 0% to 2% rise, which if hypothetically used in official figures, would bring inflation down below the Federal Reserve's desired inflation target of 2%. The interest rate rises should be over and the Fed will have to consider cutting interest rates seriously," Yun said. 

One of the key highlights of the report is the potential impact on Federal Reserve policymakers' decisions. As they weigh the need for another interest rate increase to bring inflation down to the target of 2%, the report provides crucial insights.

Shelter inflation was the largest factor in the monthly increase in the index for all items less food and energy.  

The Federal Reserve has raised rates 11 times in its attempt to bring inflation down to its 2% target. However, it has hit the pause button on hikes during its last two meetings, while declining to say it's reached the terminal rate which is currently between 5.25-5.5%. 

"The index for shelter increased 0.3% month over month and 6.7% year over year, continuing its slow deceleration," First American Economist Ksenia Potapov said. "Shelter inflation lags observed prices by approximately six-to-12 months. One year ago, annual rent growth was at 10%, while today it’s at 3%.”

That's good news because “as we head into 2024, rent and house price declines from the past year will increasingly drag down overall inflation. At this point, the Federal Reserve’s greatest inflation-fighting virtue will be patience,” Potapov said.

Overall, the Core CPI, which excludes energy and food prices, rose by a modest 0.2% in October, a slowdown from the 0.3% increase seen in September. Over the 12 months leading up to October, overall prices increased by 3.2%, down from September's 3.7%, and notably lower than the peak levels witnessed last year. Core CPI registered a 4% increase, slightly lower than the 4.1% from the prior month.

Nov 14, 2023
Realtor.Com Predicts Top Housing Markets For 2024

Toledo, Ohio, Oxnard, Calif., and Rochester, N.Y. take top spots in annual ranking

Dec 04, 2023
Equity Withdrawals Rose Slightly In Q3 2023

High interest rates are compressing usage by 55% or $54B.

Dec 04, 2023
Over One-Third Of Americans Wants A Housing Crash

LendingTree study finds 44% of consumers believe a housing crash is coming in 2024

Dec 01, 2023
Leveraging Data-Driven Strategies For Loan Affordability

Spending habits are unpredictable, which may impact consumers ability to buy

Dec 01, 2023
Housing Payments On A 5-Week Decline

Redfin's study shows monthly mortgage payments dropping $164 from peak.

Dec 01, 2023
Mortgage Interest Rates Dip To 7.22%

For the fifth straight week mortgage interest rates are down.

Dec 01, 2023