High Housing Costs Become Key Driver of Inflation

Inflation remains high despite falling prices of key goods, and rising housing costs are a main reason why.

Annual inflation eased to 8.3% in August from 8.5% in July, according to the Labor Department. But while prices of gasoline and used cars fell and rising food costs slowed slightly, the cost of shelter continued to rise. Housing costs, including rents and home prices, rose 0.7% in August from the previous month and 6.2% from a year before. Housing costs also make up for a growing share of the overall inflation rate: 25% of August’s rate, up from roughly 20% in February. And while rents and mortgage rates remain high, homebuilder sentiment, construction and home purchases remain low. Thirty-year mortgage rates passed 6% for the first time since 2008 last week, and building permit applications in August fell 10% from July and 14.4% from last year.

Sources across the spectrum cover ongoing housing market issues and how they connect to high inflation. Reports from left to right highlighted how rising housing costs made up a significant part of August's inflation report. Some voices, such as the writers of one Insider article, focused on how it "seems unlikely that Congress will step in anytime soon to provide housing relief for Americans." Coverage from right-rated sources often focused more on comparing current costs with prior years to illustrate inflation's intensity, and on voices who label the current housing crisis a market recession.