Interest Rates and Inflation Move in the Same Direction

Wondering what's happening with interest rates? Check out my latest blog at Where We Abide for a brief video explanation of the interest rate/inflation correlation.

There's a correlation between interest rates and inflation. When inflation goes up, the Fed responds by raising interest rates to curtail inflation. The increase in the interest rate means fewer people will buy homes. With fewer buyers, there's less competition for homes, so home prices stay lower. That's the Fed's goal.

This has an impact on supply and demand in the housing market. Supply is up and demand is down. In other words, we have more homes and less buyers. In our area of Texas, that means we're moving into a more balanced market.

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