I put a minus sign in front of the inflation numbers (to make the Biden inflation go down instead of up) so that I could compare the inflation to the Biden low in the Home Purchase Sentiment Index.
Sentiment is blue; inverted inflation is red:
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| This Graph at FRED: https://fred.stlouisfed.org/graph/?g=1IOiF |
The most recognizable event of the past few years is the Biden inflation. The two lines on the graph match up pretty well during that inflation. There is a lag: the path of blue line comes after the red line on the way down (during the rising inflation of 2021, for example) and up again. The lag varies, from 4 months to about a year.
The lag surprises me. Rising prices are immediately obvious to shoppers. But I suppose the impact on home-purchasing decisions has to wait until those decisions are being made.
(I just wanted to see how they match up.)
2 comments:
can you put interest rates on there too? i am thinking that maybe: first there's inflation, then the fed sees that and raises interest rates, then people see the high interest rates and don't want to take out a loan to buy a house, or something.
Hi, Jerry. This graph shows the Home Purchase Sentiment Index and
the interest rate set by the Federal Reserve:
https://fred.stlouisfed.org/graph/?g=1J9lu
1. the Home Purchase Sentiment Index data begins in 2011. The Fed's interest rate didn't move up from zero until late in 2015. And then it moved up gingerly until December 2016 -- but HPSI did start going up in January 2017. So that looks interesting.
If you look at the graph at FRED you can hover on it to get dates and values, which helps.
2. The Fed's interest rate moved upward pretty consistently from November 2017 to January 2019. During that time it looks like HPSI turned upward and ran above the 85 level to a high point in May 2018, then started coming down.
3. But it looks like the downtrend ended when the interest rate leveled off (after Jan 2019) and Home Purchase Sentiment went up again.
4. The Fed Funds rate started coming down after July 2019 and stopped going down after November 2019. Looks like the HPS index wanted to go up more, but events got interrupted by the pandemic.
HPSI was weak after the pandemic recession/recovery, and probably weakened (falling below the 75-to-80 level) as inflation hit home prices. (But I didn't look at a graph of home prices.)
I'm only looking for things that COULD be cause-and-effect. Not making any assertions here.
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