Inflation increased in September, according to the latest Bureau of Labor Statistics (BLS) report. During the past 12 months, the Consumer Price Index (CPI) rose by 3% in September — the highest reading since January 2025 — as tariff pressure on prices continues to materialize gradually.

Excluding the volatile food and energy components, the “core” CPI increased by 3% over the past 12 months. A large portion of the “core” CPI is the housing shelter index, which increased 3.6% over the year, the lowest reading since October 2021. Meanwhile, the component index of food rose by 3.1%, and the energy component index increased by 2.8%.

On a monthly basis, the CPI rose by 0.3% in September (seasonally adjusted), after a 0.4% increase in August. The “core” CPI increased by 0.2% in September, after a 0.3% increase in August.

The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.2% in September, following a 0.4% increase last month. The index for owners’ equivalent rent (OER) rose by 0.1% and index for rent of primary residence (RPR) increased by 0.2% over the month.

Though inflation is likely to remain elevated this year, the Federal Reserve is expected to continue easing given signs of labor market weakening. The housing market’s sensitivity to interest rates suggests rate cuts could help ease the affordability crisis and support housing supply even as builders continue to face supply-side challenges.

NAHB Senior Economist Fan-Yu Kuo provides more details in this Eye on Housing post.