Housing Market Cooldown Will Only Lead to More Dysfunction
The Fed had to hit the brakes on overheated home sales to control inflation, but it will be even harder now to meet future demand.
Short-term relief, longer-term pain.
Photographer: Rebecca Noble/Bloomberg
Wednesday's Federal Reserve meeting provides the clearest sign yet that the central bank is treating inflation as a national emergency, with markets expecting a 0.75% interest-rate increase. But the Fed's policy actions come at a hefty cost, particularly in the housing market.
With mortgage rates having breached 6%, the housing market is slowing. And while this might be an acceptable short-term price to pay in the fight against inflation, it's going to create future supply-chain problems once inflation is under control and we're ready for activity to pick up again.