The Daily Money: Home buyers undeterred by high prices; No credit to Fed in inflation fight

Home buyers accept new normal of high interest rates and continue home purchasing. Experts say other factors helped cool inflation, despite Fed hikes.

Advertisement Read in browser Read in browser The Daily Money ALL THE MONEY NEWS YOU NEED TO KNOW Mon Jul 17 2023 Amritpal Kaur Sandhu-Longoria |  Investigative Reporter, Consumer Watchdog @AmritpalKSL 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. Only 21% of U.S. adults say it's a good time to buy a house, according to a Gallup poll, a record low since 1978 when the company began conducting its annual poll. The latest results are from Gallup's annual Economy and Personal Finance poll, conducted April 3-25, 2023, and comes at a time when elevated mortgage rates, high home prices and low inventory levels have slowed the housing market. Brian A Jackson/Getty Images/iStockphoto 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. Federal Reserve Chair Jerome Powell arrives before he would testify to the House Financial Services Committee on June 21, 2023. Jack Gruber, USA TODAY 📰 More stories you shouldn't miss 📰 How Harley-Davidson's CEO plans on making the company's motorcycles a premium brand Credit card interest rates: How even the best credit card offers can zoom from 0% to 30% Car Recalls: Toyota, Lexus, BMW among 43,000 vehicles recalled recently. A&W root beer and cream soda lawsuit: You may be eligible for some of $15 million settlement Powerball jackpot of $875 million: Were you a winner Saturday night? Check last night's numbers 🍔 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 USA TODAY. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you. Cash diet 101: How to think about your spending and save some money In a world where a credit card reader's pleasant chirp says you've tapped away some of your money, a cash diet can reset your shopping mindset. 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