By Gregory Heym, BHS Chief Economist and and host of Crossing The Line

Today, the PI brothers give us the latest on inflation, and we find out if mortgage rates can fall for a third straight week.

 Consumer Prices Rose 2.7% Over the Past Year

While that annual gain, and the 0.3% monthly gain were expected, there is still a lot to be worried about in this report. Such as:

• At 2.7%, the annual rate of inflation remains well above the Fed’s 2% target. What’s even more concerning is that this rate was so high even with a 3.2% decline in energy prices over the past year.

• Core inflation—which excludes food and energy prices and is typically what the Fed pays the most attention to—rose at a 3.3% pace over the past year. Even more above the Fed’s 2% target.

• The 0.3% monthly gain in the headline number was the highest since April.

• Housing accounted for almost 40% of the monthly increase in headline CPI, but there are signs that housing inflation is starting to moderate.

• The producer price index came in higher than expected for November, but luckily not too many people care about PPI.

Even with this data, markets fully expect the Fed to cut rates another 25 basis points at their meeting next week, but now they aren’t so sure about a January 2025 rate cut.

Mortgage Rates Fall For the Third Straight Week

The average 30-year conforming mortgage rate fell to 6.6% this week, their third consecutive weekly decline. After rising to a recent high of 6.84% in the week ending November 21, rates have retreated nicely over the past three weeks. After a better-than-expected jobs report and some not-so-great inflation reports, it is a bit of a surprise that mortgage rates are still falling. That said, why question a good thing?

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Posted by Hannah Minnick, BHS Content Team