Despite Record Home Prices, Housing Is About to Drag Inflation Down!

Driving the dichotomy are the lagged effect of slowing rents and the mechanics of how inflation is calculated.

1. CPI 3.1% in November (annualized)
2. Shelter 6.5% in November (annualized)
3. Shelter make sup 35% of CPI, without shelter, inflation was 1.4% (annualized)
4. Home prices only rose 3.4% in October (annualized) vs. 25.2% in May 2021 (annualized).

Great news laying out how the slowing down of housing prices and rents are about to really drag inflation. As you can see, take out housing and we are BELOW the Fed's target rate of 2%.

As I keep saying, this is just one opinion (of a growing number of opinions) arguing that we are headed to Fed's target or below AND that is why the Fed has announced possible rate cuts in 2024.

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