From Calafia Beach Pundit:
Rising home prices are contributing to inflation
The housing market recovery continues, and the ongoing rise in home prices is going to be adding to official inflation statistics over the next year or two.Related:
As the chart above shows, nationwide housing prices are only about 8% below their 2006-2007 highs, and prices are up 4-5% over the past year. It won't be long before housing prices reach new nominal highs.
Housing prices feed into the CPI via "Owner's Equivalent Rent," which is the BLS's estimate of how much homeowners would be paying to rent the house they own. Rents don't always track home prices, of course, but over time there is a strong tendency for rents to track prices. As the chart above shows, prices have outpaced rents since 1987 by about 30%. With prices rising 4-5% a year, it's a good bet that rents are going to keep rising, and probably at a faster pace than we've seen in recent years....MORE
Feb. 2015
The Rent Is (Going to Be) Too Damn High
August 2014
Owner-Equivalent-Rent Inflation is Probably Not a Blip
