On such a CPI Friday amidst holiday giving season on the home front and year-end results roll-ups among companies, there's no navigating past today's commodities whiplash.

U.S. inflation reached a nearly four-decade high in November, as strong consumer demand collided with pandemic-related supply constraints.

The Labor Department said the consumer-price index—which measures what consumers pay for goods and services—rose 6.8% in November from the same month a year ago. That was the fastest pace since 1982 and the sixth straight month in which inflation topped 5%.

Like Covid omicron, multivariate impacts of today's headline inflation number may take some time and research to fully understand, even as first blush reactions to the Labor Department release run like shivers up the spine. Like omicron as well, the high-high-high inflation reading comes as little surprise but wounds nonetheless. And like omicron, who gets hurt most and who dodges the bullet and who actually winds up benefiting from the historically sharp surge in pricing.

Omicron, as the Covid pandemic era's latest messenger of how-things-will-work, and capital I inflation as one of the sweeping global functions of that message, today merge in the Labor Department's headline.

Scientists worldwide are at work around the clock to decipher three key characteristics of omicron:

• transmissibility ... i.e. how contagious?
• severity ... how perilous and lethal?
• evasiveness ... can it break through vaccination, natural immunity, and/or prior inflection immunity effects?

Likewise, at least three forward-looking potential impacts of inflation shocks hover as a spectre on homebuilding investment and development's near- and mid-term horizon.

• commodities pricing surge .... i.e. immediate reforecast of input costs
• Fed policy scenario  ... two 2022 interest rate increases vs. dovish outlook
• Kitchen table confidence ... will "Animal Spirits" pivot?

Early in Wall Street's trading on Friday, financial markets' teflon surfaces absorbed word of the 39-year spike in prices, and rumbled upward.

Will prospective homebuyers behave similarly?

Confidence that they will relies on new-home demand's three-legged stool:

• Demographics
• Value of new
• Favoring timing (rates, payment power, loan availability)

The pandemic era and its ongoing, ever-evolving bag of tricks has done little else so much as to sharpen the distinctions, the distances, and the decoupling among households and individuals who command discretionary means or a clear pathway to them versus those who have already been challenged to reach that pathway, and are now farther than ever from hope of getting there.

Naturally, the most predictive data depends on who's being asked what.

Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in November by 0.8 points to 74.7. The HPSI is down 5.3 points compared to the same time last year. Read the full research report for additional information.

Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 30% to 29%, while the percentage who say it is a bad time to buy decreased from 65% to 64%. As a result, the net share of those who say it is a good time to buy remained unchanged month over month.

A K-shaped ongoing recovery glide-path could in fact buffer market-rate producers of for-sale or for-rent homes and communities – in part because at least two of the three legs above – demographics and the value of new – continue to be almost a sure bet on solid demand.

The "favoring timing" pillar may filter out a portion of demand who a year-ago may have stood a chance of getting on the market-rate pathway, but now will be suffering the greatest consequences of commodities price inflation in their daily household outlays. How meaningful a share of would-be buyers or renters of new-construction homes and communities will detour as a result of their new household budget challenges remains to be seen.

What's not in question is that commodities price-pressure – added to land and development inflation – will force builders' costs higher. Then, the hefty margins that have been flowing through on their balance sheets will either take a hit or they'll be able to pass those costs along in asking price increases.

The thing about headline risk is that when the headline hits the risk that's been already there rears its head or it passes as an overblown storm warning.

The really fundamental risk – inflation or no – will only come clear after the limbo of research, data, and evidence reveals whether the latest Covid variant, omicron, will hold people back from pursuing their livelihoods. Until we know the answer to that question with certainty and specificity, guessing what happens next with the impacts of inflation is academic.

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