Housing-Market Rebound Poses Challenge for Fed’s Inflation Fight

Demand for homes continues to outpace supply, lifting prices
More stubborn inflation could require higher rates for longer

“I remain concerned about whether inflation will return to target in a sustainable and timely way,” Federal Reserve Bank of Dallas President Lorie Logan says at the Central Bank Research Association’s annual meeting in New York.Source: Bloomberg

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By Jonnelle Marte

July 24, 2023 at 9:00 AM UTC

This article is for subscribers only.

Home prices in the US are again on the rise after a brief dip last year, complicating the Federal Reserve’s effort to contain inflation and raising questions about how much further policymakers will have to hike interest rates.

Demand for homes around the country continues to outpace supply, despite a rapid rise in borrowing costs spurred by the US central bank. While signs of easing price pressures have some policymakers eyeing the end of their tightening campaign, they could end up having to increase rates higher or hold them there for longer if the resilient housing market leads to slower progress on inflation, economists and Fed officials say.