High Monthly Housing Expenses Are a Cause for Pause

The U.S. housing market is experiencing an unprecedented affordability crisis, with the median monthly mortgage payment reaching a record high of $2,632 due to mortgage rates above 7% and a 4% year-over-year increase in home prices.

Low inventory is a key factor driving price increases, but it's also causing some prospective buyers to step back, resulting in a 12% year-over-year decline in pending home sales. The possibility of a rate hike in November or December could maintain high mortgage rates through year-end, according to Redfin, though new economic data over the next several months may influence rate trends.

This week’s CPI report shows that inflation came in a touch higher than anticipated. That doesn’t change the expectation that the Fed is highly unlikely to hike interest rates next week, but it does make a rate hike in November or December appear more likely.

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