Today’s average mortgage interest rate is 6.86%. Perhaps more import today is the PCE price index reading. The PCE, the gold standard of big picture inflation measurement, showed inflation of just .182% month over month – and that is an annualized figure of only 2.184%! Meaning we’re at two months of data supporting the target 2% level of inflation.
But the largest component change here is the shelter inflation (rent & owner’s equivalent rent). Housing inflation dropped sharply to the slowest pace since 2021, and equal to the lowest reading seen pre-pandemic. A meaningful change here is even more significant because it makes up the largest percentage of the inflation readings. And lower inflation means the Fed can lower interest rates.
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