George Pearkes: Was curious what this looked like for core. OER is one-third of core, actual rent paid is 10%. Core CPI ex OER has been below 2% YoY for the past 10 months and was just 0.2% annualized MoM in May. Chart shows annualized rates of change.

Was curious what this looked like for core. OER is one-third of core, actual rent paid is 10%. Core CPI ex OER has been below 2% YoY for the past 10 months and was just 0.2% annualized MoM in May. Chart shows annualized rates of change.

In the cheap fun department, the CPI, excluding owners' equivalent rent, which no one pays, has been pretty much at the Fed's 2.0 percent target for almost a year cepr.net/cpi-without-...

CPI Without Owner’s Equivalent Rent Has Been at Fed Target for a Yearcepr.net That’s a bit of an exaggeration, but the CPI, excluding owners’ equivalent rent (OER) fell to 1.4 percent in June of 2023 and has remained pretty close, but mostly above 2.0 percent ever since. We all...

Remove OER though and you've got to add back in something along the lines of mortgage payments. No idea what that would look like

Well not necessarily! Consider Sweden, where the core measure is CPIF ex energy, or HICP which doesn’t include any owned housing proxies.

You can absolutely have a reasonable price index without owner-occupiers' housing, but what I mean is that if we're trying to capture a "why people are pissed off about prices" index, you probably want to include people's mortgage payments

Again, no, because the vast majority of mortgage payments are fixed rate amortizing so the change in rates for new loans hasn’t moved their monthly outlays by a single cent. Also aggregate housing market LTV is like 50.

I would have thought that despite that, the increase in both prices and rates would have had a substantial impact, given ~10% annual turnover. But looking at mortgage payments to income, it seems not fred.stlouisfed.org/series/MDSP

Mortgage Debt Service Payments as a Percent of Disposable Personal Incomefred.stlouisfed.org Mortgage Debt Service Payments as a Percent of Disposable Personal Income

Yes turnover has dropped sharply! That’s why existing home sales are so low.

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