According to Freddie Mac chief economist Sam Khater, “Although the increase in rates will continue to dampen demand and put downward pressure on home prices, inventory remains inadequate. This indicates that while home price declines will likely continue, they should not be large.”
Inflation figures have continued to fluctuate alongside mortgage rates. Data from the Labor Department showed that the consumer price index (CPI) edged up 0.1% in August after a flat month in July. Compared to a year ago, prices were up 8.3% – the slowest rate increase in five months, mainly due to a 10.6% pullback in gasoline prices.
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“Headline CPI was in line with our expectations, but core inflation came in much hotter than expected,” said Nathaniel Drake, an associate at Fannie Mae’s Economic and Strategic Research Group.
Drake said the reports are consistent with the group’s forecast that the economy is largely stagnating and will tip into a recession early next year.