The rate of inflation reached 8.5% in March, continuing at a 40-year high and showing few signs of relief for consumers. Higher gas prices, food, and housing costs fueled the consumer price index’s jump.

“Aggressive inflation will force the Federal Reserve to raise interest rates multiple rounds this year and actively pursue quantitative tightening,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “That is why mortgage rates recently have shot up so high. Higher mortgage rates will inevitably pull home sales down in the coming months and slow home price appreciation.”

“Home price is not part of the consumer price index but has hurt first-time buyers, especially with rising mortgage rates,” Yun says. “Clearly, more construction of both apartments and single-family homes is needed.”

Source: “Instant Reaction: Inflation, April 12, 2022,” National Association of REALTORS® Economists’ Outlook blog and “U.S. Inflation Rate Leaps to 8.5%, CPI Shows, as Higher Gas Prices Slam Consumers,” MarketWatch (April 12, 2022)