While the Federal Reserve is working hard to reduce inflation, the most recent data show that the rate of inflation is still rising. You're probably feeling the pinch in your wallet at the gas pump or the grocery store, but this news may have you wondering: should I still buy a house right now?

Greg McBride, Chief Financial Analyst at Bankrate, explains how inflation is affecting the housing market:

“Inflation will have a strong influence on where mortgage rates go in the months ahead. . . . Whenever inflation finally starts to ease, so will mortgage rates — but even then, home prices are still subject to demand and very tight supply.”

Nobody knows how long it will take to bring inflation down, so the future path of mortgage rates is also unknown. 

While the uncertainty is unsettling, here are the reasons why both inflation and mortgage rates are important for you and your homeownership plans.

When purchasing a home, the mortgage rate and the purchase price are important considerations. 

Higher mortgage rates affect how much you'll pay for your monthly mortgage payment - and how much you can comfortably afford. 

And, while it's true that buying and financing a home is more expensive this year than it was last, that doesn't mean you should put your search on hold.  This is why.

Homeownership Is Historically a Great Hedge Against Inflation

In an inflationary economy, prices rise across the board. Historically, homeownership has been an excellent hedge against rising costs because you can lock in your largest monthly payment (your mortgage) for the life of your loan. This helps to keep some of your monthly expenses in check. Not to mention that as home prices rise, so will the value of your home. That is why, according to Mark Cussen, Financial Writer at Investopedia:

“Real estate is one of the time-honored inflation hedges. It’s a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.”

Also, no one is calling for homes to lose value. As Selma Hepp, Deputy Chief Economist at CoreLogic, says:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”

In a nutshell, rising inflation or higher mortgage rates do not have to put your home search on hold. There are other factors to consider when deciding whether you want to buy a home. Aside from protecting yourself from the effects of inflation and increasing your wealth through ongoing price appreciation, there are numerous other reasons to buy a home right now, including addressing changing needs and so much more.

Bottom Line

Homeownership is one of the best decisions you can make in an inflationary economy. You get the benefit of the added security of owning your home in a time when experts are forecasting prices to continue to rise.