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Economics

US Housing Hit by Spiraling Mortgage Rates as Inflation Persists

Tighter central bank policy is taking a toll on building activity and sales.

Completed and under-construction homes in Trappe, Maryland, on Oct. 28, 2022.

Completed and under-construction homes in Trappe, Maryland, on Oct. 28, 2022.

Photographer: Jim Watson/AFP/Getty Images
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Soaring US interest rates have done little to curb inflation, but they’re hitting housing hard. The surge in borrowing costs has eroded affordability for buyers, slowing residential sales and building activity, and threatening economic growth.

Home sales and housing starts have slumped after peaking during the first couple of years of the Covid-19 pandemic, when low borrowing costs allowed millions to relocate.