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The Fed is closely watching prices and inflation. Gas and food prices are unlikely to fall near term due to seasonal factors. Strong housing sector prices contribute to inflation. A contractor says that while lumber prices have come down, paint, materials and labor costs have gone up to offset it so building a house has not gotten cheaper. I have to admit I’d have lost money betting against home values rising further given mortgage rate hikes. I thought that home values would fall to compensate for higher rates but…   They explain the strength in the housing market as demand exceeds supply with many more prospective buyers than homes on the market. There is less turnover of older homes as owners do not want to give up favorable mortgages to upgrade homes at higher interest rates. My granddaughter and her spouse just moved into a townhouse as new first-time homeowners. The two professionals bought what they could afford which was a modest starter home in Omaha. There were multiple offers at the listing price. I was favorably impressed with the amount of square-footage they got for their investment. Rent is high in part because the high cost of home owning…

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