Key Points:
Mortgage rates have increased from recent lows, though rates are somewhat lower from this time last year.
- According to MBA’s applications survey, purchase activity is 4% higher from last year while refinancing activity is up by 42%.
MBA Applications Survey: Year-over-Year Trends
Core CPI inflation grew by 3.3% year-over-year in November. Housing-related components have been significant drivers of inflation with the CPI for shelter rising by 4.8% from last year. Shelter inflation fell modestly in November on an annualized basis, though a large inflationary contribution from a minor, volatile component masked a significant deceleration in inflation across components with heavier weights.
- Two components, rent of primary residences and owner’s equivalent rent (OER) of primary residences (i.e. the hypothetical rent a homeowner would pay to rent their home), make up around 95% of sampled CPI shelter by weight, so in a typical month these components tell most of the shelter inflation story.
- Last month, a minor component – lodging away from home (e.g. hotels) – saw price growth at a 45% annualized rate.
- Owner’s equivalent rent of primary residences, the most important component by weight, is currently growing at its slowest pace since January 2021.
Contribution to CPI Shelter Inflation by Component
