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Inflation could hurt homebuyers, warns Yellen: ‘I do worry about affordability’

"We will have several more months of rapid inflation."

Treasury Secretary Janet Yellen testifies during a Senate Appropriations Subcommittee hearing to examine the FY 2022 budget request for the Treasury Department on June 23, 2021 at the US Capitol in Washington, DC.
Greg Nash | AFP | Getty Images

The consumer price index rose 5.4% in June, the fastest it's risen in almost 13 years. This could continue for a few more months, Treasury Secretary Janet Yellen told CNBC Thursday — and she cautioned that inflation's effect on home prices could hurt lower-income buyers.

"We will have several more months of rapid inflation," Yellen said on "Closing Bell." "So I'm not saying that this is a one-month phenomenon. But I think over the medium term, we'll see inflation decline back toward normal levels." 

Housing prices have already climbed over 13% compared to 2020, according to Zillow.

Prices are going up: How inflation can affect you

Video by Courtney Stith

Still, Yellen doesn't see parallels to the housing bubble that spurred the 2008 financial crisis. "It's a very different phenomenon," she said. "But I do worry about affordability and the pressures that higher housing prices will create for families that are first-time homebuyers or have less income."

If you've been saving up to buy a house, rising prices are likely to mean you need a bigger down payment. Some strategies may help. For example, some loans require down payments of as little as 3.5% or even zero. Plus, first-time buyers can also often get grants through down-payment assistance programs from their city, state, bank, or employer.

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