Yesterday's US Consumer Price Index (CPI) report surprised expert economists by revealing a (much) lower than expected increase in the cost of living. The US CPI decline in July resulted from the steep drop in energy prices that peaked in early June. The US CPI remained unchanged, down from a 1.3% spike in June, 2022.
The overall effect of a reduction in the year-over-year inflation rate to 8.5% from a four-decade high of 9.1% will likely have an effect on the housing market and especially in the greater Victoria area real estate market. The US Fed will potentially keep interest rates level if this key trend continues. While many US commodity prices fell, it should be noted that food prices did rise. The lag in the decline of energy to produce, transport and store food may still be in the works. Watch for next months numbers to see if this stagnation in inflation continues.
For first time home buyers, this presents an almost perfect storm of opportunity. While there have been rising levels of inventory, most home sellers do not want to move in winter months. If the inventory cools off the market prices and interest rates remain flat or go down in the fourth quarter of 2022, they may be good buying opportunities.
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