The Daily Money: Home buyers undeterred by high prices; No credit to Fed in inflation fight
This is Amritpal Kaur Sandhu-Longoria with your Daily Money headlines for Monday.
People are still out there buying homes, despite high prices and interest rates. Experts had predicted that housing prices would fall as interest rates headed upward, but the opposite happened − home prices have been increasing for four consecutive months since February.
And it's possible this upward trend will continue. There are simply not enough homes, and 85% of current mortgage holders who are locked into a sub-5% interest rate are not going sell and then buy a home at a higher interest rate. Experts predict that interest rates could fall in the second half of 2023 as June employment figures suggested that the labor market was softening and economic conditions were cooling. But, there is definitely no going back to the 3% interest rates, experts predict.
Inflation is falling, but no credit to the Fed
As the Federal Reserve continues interest rate hikes to fight inflation, economists point to other factors helping in the inflation fight instead − the unwinding of pandemic-related supply chain bottlenecks, a sharp drop in commodity prices and a pullback in COVID-related consumer spending binges.
The Fed's hike rates are definitely getting blamed for doing some other damage − increasing rates for mortgages and car loans, driving up credit card spending and other consumer purchases, affecting the stock market, and threatening to tip the economy into recession. And while some experts say the Fed's interest rate hikes do deserve some credit, the rate hikes may have a bigger impact in the months ahead, and slow price gains for services like haircuts and car repairs, and dampen job and wage growth.
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🍔 Today's Menu 🍔
While National Ice Cream Day was yesterday, the month of July is still National Ice Cream Month. And some ice cream shops like Cold Stone Creamery and Baskin Robbins are still offering deals and discounts.
Here's a fun fact − the International Dairy Foods Association predicts we eat about 20 pounds, or four gallons, of ice cream annually!
About The Daily Money
Each weekday, The Daily Money delivers the best consumer news from Paste BN. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.