The Heath Barnes Show

Mortgages Reimagined

with your host, Heath Barnes

How CPI and Inflation Affects Home Prices


  • CPI (Consumer Price Index) is the measure of price change experienced by consumers
  • When CPI increases, interest rates usually follow
  • When housing prices and interest rates are high, inventory is usually low but also creates a perfect opportunity to purchase
  • When CPI begins to come down, usually interest rates do too, which leads to an increase in demand for houses, which causes prices to go up
  • For the right person with $25,000+ saved, it may make sense to look at purchasing a home (first, or multiple) to beat inflation and have an asset that’s value historically trends upward always over time

You probably have heard the term CPI thrown out a lot lately, but do you know how it affects interest rates and home prices? The Consumer Price Index (CPI) is the average change over time in the prices paid for a basket of goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.


Central banks set interest rates based on CPI. Generally, when the CPI increases, meaning prices have gone up on average, the central banks increase interest rates to control inflation. This makes borrowing more expensive and reduces the amount of money in circulation. This can have a direct effect on home prices, as people are less likely to be able to afford to buy a home when interest rates are higher.


When the CPI decreases, meaning prices have gone down on average, the central bank will lower interest rates to stimulate the economy. This makes borrowing cheaper and increases the amount of money in circulation. It can also affect home prices, as people are more likely to buy a home when interest rates are lower. There are huge opportunities in the market when interest rates are higher.


So, when the CPI goes up, interest rates go up, and home prices may go down. When the CPI goes down, interest rates go down, and home prices usually go up. It’s important to keep an eye on the CPI and how it is affecting the economy and housing market to make informed decisions when buying or selling a home.


In my opinion, the perfect time to buy a home is when we are between these two stages I mentioned above, which I believe we currently are. You can purchase a home and lock in the price, which might include a higher interest rate for a year or two. We can then have a plan to refinance the home and get a lower interest rate over time as the value of the home increases. This is how you can build wealth.


When interest rates begin going down. The demand AND prices of homes will increase based on historical data. It is basic supply and demand.


I can help you with your options so that when you are ready to purchase your next (or first) home. I will help you create a plan, show you how much you qualify for, and share with you how and why some of the most intelligent people are purchasing homes right now. I can share with you how you can do what the wealthy are doing to own your first (or next home) and begin building wealth.


Whether it’s time you get to wake up to that delicious coffee smell in a new house and community that you love or to check your bank account with the incoming wired money with your tenant’s monthly rent payment…

Book a call with me to explore how close you are to owning that first, or next home.

Your lender for life,


Heath Barnes,

P.S. Book your call with me here (at the time of this writing, I only have two slots open).

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