Inflation continues to kick higher with an 8.5% consumer price rise in March. Aggressive inflation will force the Federal Reserve to raise interest rates multiple rounds this year and actively pursue quantitative tightening. That is why mortgage rates recently have shot up so high. Higher mortgage rates will inevitably pull home sales down in the coming months and slow home price appreciation. My projection at the moment is for a 10% reduction in home sales this year and a 5% home price gain by the year’s end.
Rents rose by 4.4%, even though many private sector data sources have been pointing to even faster gains. Hotels and motels are charging 29% more. Home price is not part of the consumer price index but has hurt first-time buyers, especially with rising mortgage rates. Clearly, more construction of both apartments and single-family homes is needed.
REALTORS® drive much more than the general population and have felt the pain at the pump. To quantify this, gasoline prices were up 48% from a year ago. Higher energy prices will also filter up to airfare, which rose 24%, and pretty much to all goods that are transported. Higher energy prices moreover will provide revenue to energy-producing countries including Russia, irrespective of economic sanctions. It is a lower energy price from raising global oil supply that will squeeze Putin.