by Reuters
Reuters.com
Sept 3 (Reuters) – U.S. housing inflation is likely to ease in the coming year as the gap between supply and demand for homes narrows, according to research published on Tuesday by the Federal Reserve Bank of San Francisco.
That decline will likely add to downward pressure on inflation, the researchers said in the regional Fed bank’s latest Economic Letter.
Stubbornly high shelter inflation has added considerably to overall U.S. price pressures in recent years even as the Fed raised borrowing costs aggressively to bring down inflation.
That is because while higher borrowing costs reduces demand for housing, it also reduces supply by making it more costly for builders.