Home Prices Soar At Over 5 Times The Fed's Inflation Target In All US Cities

The Fed's most frequent lament is that no matter how many trillions in bonds (and stocks and ETFs) it buys or how much liquidity it forehoses into the market, it just can't push inflation higher.

Well, here's an idea: maybe all the central-planning mega brains at the Marriner Eccles building and 33 Liberty Street can take a break from whatever circle jerk they are engaged in right now, and look at the latest Case Shiller numbers which showed not only that home prices surged at the fastest pace in seven years, rising at a double-digit pace for the first time since 2014...

... but that for the first time since the financial crisis, the annual price increase in every major US MSA (according to Case Shiller there are 20 of them) rose by at least 7.7% Y/Y (in the case of Las Vegas), and as much as 14.4% in Phoenix, meaning that the average home prices across all of the US is now rising at over 5 times the Fed's stated inflation target, and even the cheapest US MSA is rising at nearly 4 times the Fed's inflation goal.

Why does this matter? Simple: Because if - as Joseph Carson mused last month - CPI measured actual house prices, inflation would be above 3% right now.

For those who missed it, here again, is the explanation:

"Actual" consumer price inflation is rising during the recession. That runs counter to the normal recessionary pattern when the combination of weak demand and excess capacity works to lessen inflationary pressures.

The main source of faster consumer price inflation is centered in the housing market. The Case-Shiller Home Price Index posted a 7% increase the last year, more than twice the gain of one-year ago.

The sharp acceleration in house price inflation represents the fastest increase since 2014 and runs counter to the patterns of the past two recessions. During the 2001 recession house price inflation slowed by one-third, while in the Great Financial Recession housing prices posted their largest decline in the post-war period, falling over 12% nationwide.

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