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Opinion
Conor Sen

Stagflation Is Already Here in the Housing Market

Soaring prices and low inventory are causing headaches for homebuilders and buyers but benefiting owners — and therein lies the Fed’s predicament as it seeks to lower inflation.

Supply still falls far short of demand.

Supply still falls far short of demand.

Photographer: Justin Sullivan/Getty Images

If you want to know what stagflation looks like, check out the housing market. The conditions that existed during the 1970's — high inflation and stagnant output — are happening already in this segment of the U.S. economy, illustrating the challenges ahead for consumers, industry players and the Federal Reserve.

Though homebuilders continue to expand construction in response to elevated demand, the number of homes actually being completed has been stagnant because of persistent supply chain problems. This stagflation is a headache for homebuilders and homebuyers, but it's a benefit for many existing homeowners — and therein lies the Fed’s predicament as it seeks to lower inflation.