In this Real Estate News Brief for the week ending December 24th, 2022... we have the latest report on inflation, a surge in all-cash home purchasing deals, and the results of a survey on real estate as a wealth builder.   Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.   Economic News   We begin with economic news from this past week, and a new report that shows inflation is cooling off. The Commerce Department says the Personal Consumption Expenditure index shows that prices rose just .1% in November. That brings the annual rate of inflation down from 6.1% to 5.5%. The core rate, which eliminates food and gas prices, was up .2% with an annual rate that dropped from 5% to 4.7%. The PCE index is the gauge preferred by the central bank because it takes into account changes in consumer behavior to compensate for high prices. (1)   Some economists believe that the good news on inflation will soften the Fed’s plan to continue with rate hikes. Fundstrat equity strategist Tom Lee is predicting a “massive collapse” in inflation. As reported by CNBC, Lee believes that inflation is currently operating near the Fed’s long-term goal of 2%, and that could prompt the Fed to slam on the brakes when it comes to rate hikes. (2)   The job market is still fending off the impact of a slowing economy. Initial claims were only slightly higher last week, to a total of 216,000. That’s only 2,000 claims higher than the week before. The number of continuing claims was unchanged at 1.67 million. (3)   November was a good month for new home sales. They were up 5.8% compared to October. Year-over-year, they’re still down 15.3%. Analysts say that November sales rose despite high mortgage rates thanks to builder incentives such as mortgage rate buy-downs and home price reductions. (4)   New home construction was down in November, along with housing permits and builder sentiment. The Commerce Department reports that housing starts were down .5% following a 2.1% drop in October. Starts were down much more which means fewer new homes in the pipeline. They were down 11.2% in November. For single-family homes, housing starts were down 4.1% and permits were down 7.1%. For multi-family buildings of four or more units, starts were “up” 4.8% but permits fell 17.9%. (5)   Builder sentiment fell again in December as it has done for every other month this year. But as MarketWatch reports, builders see a silver lining. They’ve had a tough time finding buyers, but mortgage rates have been coming down from the 7% level, and buyers are trickling back into the market. Builders are also offering incentives, as I mentioned, to sweeten the deal. (6)   Existing home sales continue to slump. They were down in November for the 10th month in a row. The National Association of Realtors reports a 7.7% decline to a seasonally adjusted annual rate of 4.09 million. Existing-home sales have now dropped almost 37% since March. The last time they were this low was in May of 2020. Before that, it was November of 2010. (7)   Mortgage Rates   The 30-year fixed-rate mortgage continues to slowly deflate. According to Freddie Mac, the average rate was down another 4 basis points last week, to 6.27%. The 15-year mortgage went in the opposite direction. It was up 15 basis points to 5.69%. (8)   In other news making headlines…   New High for All-Cash Purchases   High interest rates are turning more affluent home buyers into all-cash buyers. Redfin says the all-cash deals have gone up from 24.7% last October to 31.9% this last October. (9)   Redfin analyzed 39 of the largest U.S. metros for this data. Most of the all-cash deals happened in Florida with Jacksonville topping the list at 50%. Other top metros for cash sales were West Palm Beach, Cleveland, Cincinnati, and Atlanta. The lowest number of all-cash offers happened along the West Coast where home prices are more expensive.   Real Estate as a Wealth Builder