Inflation is too low according to the Fed. That may be true when you incessantly make adjustments for quality, substitute goods, and exclude from your index, the single most important price for most consumers. That price would be the price of a home. You know, the American dream. Surely, even the PhD’s setting monetary policy are familiar.
Instead of using the actual price of homes, the Fed uses a contrived proxy called owners equivalent rent. Rent inflation is falling, but home prices are going the other way. Home prices have increased over 8.4% over the last year.
If you are in the market for a home, inflation is soaring.
The WSJ has more:
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 8.4% in the year that ended in October, up from a 7% annual rate the prior month. October marked the highest annual rate of price growth since March 2014.
Sales of previously owned homes, which make up the bulk of the housing market, rose in October to the highest level since 2006, according to the National Association of Realtors. Record-low mortgage rates have increased demand, while the supply of homes for sale has remained low, especially at affordable price points.
The Case-Shiller 10-city index gained 7.5% over the year ended in October, compared with a 6.2% increase in September. The 20-city index rose 7.9%, after an annual gain of 6.6% in September.