> Inventory is still bumping along record lows. Absolutely, but that's part of the mechanism through which price rises happen, more than a causal explanation o

> Inventory is still bumping along record lows. Absolutely, but that's part of the mechanism through which price rises happen, more than a causal explanation of it. It further suggests that shelter has a lot of momentum. > Housing starts were... side lined with labor and material shortages. That's a bigger part, but easily offset by historically low population growth in the US. Low pandemic interest rates were almost certainly a much bigger factor in driving the housing market than the cost of construction. > ~5% mortgage rates are also likely to begin to slow things down. Again, absolutely (although if inflation also levels out at 5%, that may be neutral). But, as I mentioned in my comment, there's a "right half-plane zero" in the transfer function between interest rates, housing prices, homeownership costs, and shelter. Rising mortgage rates may level off housing prices, but meanwhile drive up the cost of homeownership. Even as the housing market plateaus, those rising homeownership costs can carry shelter higher, both in the form of real rents and "owner's-equivalent" rents. (In Canada the relationship is more direct, with mortgage interest costs directly included in the shelter basket, but the relationship exists indirectly in the US CPI metric too). That shelter CPI can trend higher as housing prices plateau is the price of reciprocity that we pay for shelter CPI appearing low after interest rate cuts, even as housing prices grew rapidly.