Prices cooled more than expected in November, but housing still costs 7.1% more than last year

Federal Reserve Bank Board Chairman Jerome Powell answers reporters' questions during a news conference following a meeting of the Federal Open Market Committee (FMOC) on November 02, 2022 in Washington, DC.
Getty Images | Chip Somodevilla

Inflation was still up 7.1% year-over-year in November, though down from October's rate of 7.7%. High housing costs, also up 7.1% from last November, overwhelmingly contributed to that continued elevation.

While economists expected inflation to continue its downward trend, many weren't sure what rent and owner-equivalent prices would show. Costs for shelter — which includes rent, owner's equivalent to rent and lodging outside the home — rose 0.6% from October which saw the fastest month-over-month rate since August 1990. 

Though home prices and rent have begun to come down from their peak this summer, the market remains unaffordable and competitive in many areas for those looking to make a move. U.S. home prices were up 10.6% in September compared to the previous year, the latest Case-Shiller home price index showed.

However, that's down from the 12.9% increase in August.

Rents also fell a modest 0.9% from September to October, bringing the median rent price for the 50 largest U.S. metros below $2,000 for the first time since April.

Prices for other items, including gas and used cars, continued to fall after helping drive inflation to its peak over the summer. 

The news tees up the Federal Reserve for another round of rate hikes at its meeting later this week. Investors are expecting another increase to the federal funds rate, but hoping to avoid a return to the 0.75 percentage point hikes seen earlier this year. 

November's better-than-expected inflation reading continues to show a so-called "soft landing" for the economy might be possible.

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