Fed Chairman Jerome Powell Says ‘Tough Correction’ Should Balance US Housing Market CryptoGlobe

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Following the Covid-19 pandemic, real estate investors have fared extremely well, despite the millions of Americans who were laid off and faced evictions during the 2020 lockdowns. Stimulus put a band aid on the financial wounds inflicted by Mainstreet business closures and blocked supply. Chains. In fact, post-pandemic, the US housing market hit new highs and soared amid rising inflation. Meanwhile, US Federal Reserve Chairman Jerome Powell hinted this week that the US housing market needs a correction, and he thinks it can be adjusted in such a way that “people can to buy houses again”.

‘Deceleration in housing prices’ is a ‘good thing’, says Fed Chairman

Last Wednesday, the US Federal Reserve met to announce the next interest rate hike and the central bank raised the federal funds rate by 75 basis points (bps). The Fed said last week that it was aiming to “achieve as many jobs as possible” and the central bank is still targeting a 2% inflation rate over the long term. The three-quarters of a percentage point hike is the Fed’s third consecutive 75 basis point rate hike. After the 75 basis point increase, equity markets, cryptocurrencies and precious metals had seemingly priced in the Fed rate hike.

Fed Chairman Jerome Powell says a
At this year’s Jackson Hole Economics Symposium in late August, Jerome Powell (pictured left) stressed that the Fed’s battle with inflation will bring “a bit of pain”, after insisting on the fact that the last year of high inflation “is likely to be temporary”.

However, the Fed Chairman also discussed the US housing market this week, and the comments have rattled markets over the past few days. Powell alluded to a housing correction or cooling house prices to bring inflation down to 2% levels.

“The deceleration in house prices we’re seeing should help bring prices more closely into line with rents and other housing market fundamentals – and that’s a good thing,” Powell insisted. “Longer term, what we need is for supply and demand to be better aligned, so that house prices rise at a reasonable level, at a reasonable pace, and people can once again buy houses,” Powell told reporters on Wednesday.

The 16th Chairman of the Federal Reserve added:

From a kind of economic cycle point of view, this difficult correction should rebalance the housing market.

Average 30-year fixed mortgage interest rate jumps 27 basis points to 6.55%, economist says house prices are still ‘significantly overvalued’

Bankrate.com statistics from September 24, 2022 indicate that the current average for a 30-year fixed loan is 6.55%. Data from Bankrate.com shows the 30-year fixed mortgage rate jumped 27 basis points in the past seven days. Ten regions in the United States are falling faster than most regions, according to recent data collected by real estate firm Redfin. This includes US cities like Seattle, Las Vegas, San Jose, San Diego, Sacramento, Phoenix, Oakland, North Port, Florida, and Tacoma, Washington.

Fed Chairman Jerome Powell says a
Trust chart published by noradarealestate.com on September 17, 2022.

“Clearly the change in the Fed’s choice of words from June ‘housing needs a reset’ to ‘today’s housing reset actually means a correction’ indicates that they are pretty good with falling house prices, slowing home sales and construction pulling back significantly in order to achieve their mission,” John Burns Real Estate Consulting head of research Rick Palacios told Fortune on Thursday. Jr.

Following Powell’s comment on the housing market, USA Today reporter Terry Collins quoted a number of pundits who detail that the United States is “definitely in an endless housing correction soon.” Moody’s Analytics chief economist Mark Zandi told USA Today he thinks the US housing market is already shrinking.

More than half of the top 400 U.S. housing markets are “significantly overvalued” by more than 25%, Zandi told Collins. “I think it will play out over the next couple of years, and it will be mid-decade until things bottom out,” the chief economist at Moody’s Analytics remarked.

Keywords in this story

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What do you think of Fed Chairman Jerome Powell’s housing correction statements on Wednesday? Do you think the US housing market will continue to cool? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is the news manager for Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 6,000 articles for Bitcoin.com News about disruptive protocols emerging today.




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