Federal Reserve officials are predicting a slowdown in the housing market but there have been conflicting signals: Home sales have slowed, while housing prices remain high. But a mere slowdown is unlikely to stop the Fed in its crusade to crush inflation, which has led to an increase in interest rates, putting pressure on mortgage rates. Yesterday, the Fed released the minutes from its most recent policy meeting in late July. Fed officials, according to the minutes, think inflation remains too high, and are committed to raising rates. Fed officials did see trouble coming in housing. They said that housing activity had “weakened notably,” in large part because of higher mortgage rates. Meeting participants “anticipated that this slowdown in housing activity would continue,” the minutes said. Many have predicted that the Fed’s efforts to slow inflation would crash housing prices, after a big run-up during the pandemic. And a housing bust might force the Fed to stop raising rates, perhaps before it was able to tame inflation.
