The bad news is even higher mortgage rates could be on the way. The good news is that the lagging data might not show the entire picture.
Rent of primary residence, a subcategory tracking the cost of rent, gained a seasonally adjusted 0.5%, the same as August’s gain, and was 7.4% higher than one year prior. Shelter inflation gains slowed earlier this year, but recent strength in housing prices amid a low supply of homes for sale could put upward pressure on comparable rents, Barron’s previously reported. It’s a risk the Fed is aware of: “Some participants noted that housing demand was resilient despite higher interest rates,” according to the minutes from September’s FOMC meeting, released Wednesday.
Rents’ stubborn ascent “is the main reason why consumer prices are not fully under control and why the Fed refuses to consider cutting interest rates,” Lawerence Yun, the National Association of Realtors’ chief economist, said in a statement.