September 23, 2022


  • I’m George Ratiu, Manager of Economic Research with
  • Welcome to fall! Changing leaves are turning the landscape into a colorful tapestry and the air is filling with the scent of pumpkin spice.
  • The economy continues to show signs of modest growth, with resilient consumer spending and a solid job market.
  • This week’s jobless claims numbers underscored the fact that demand for labor remains strong. At the same time, inflation continues at a 40-year high, adding financial pressures on households struggling with housing affordability.
  • This was a central theme at this week’s meeting of the Federal Reserve’s policy committee. Not surprisingly, the central bank voted to increase the short-term funds rate by another 75 basis points and reiterated its commitment to bring inflation down to 2%. In addition, Chairman Powell stated in follow-up remarks that housing is in need of a correction in order to restore balance to markets.
  • For real estate, the Fed’s decision means that interest rates are expected to continue rising over the next few months.
  • Mortgage rates followed suit this week, jumping well-over 6%, to the highest level since October 2008. The buyer of a median-priced home, at today’s rate and using a 30-year mortgage, is looking at a monthly payment that is almost $900 higher than a year ago, which adds more than $10,000 to the yearly financing burden.
  • With homebuyers pressed against a financial ceiling, sales of existing homes declined for the 7th month in a row and August sale prices dropped from their June peak. Transactions contracted at every price segment, from entry-level all the way to luxury.
  • The general decline in housing activity was also mirrored in the homebuilder sentiment index, which fell again in September. Almost a quarter of builders are slashing prices to attract buyers.
  • The downbeat outlook about residential housing spilled over into new construction activity. While housing starts picked up in August, mostly on account of strong activity in the multifamily sector, permits for new homes sank, and even the pace of completions took a step back.
  • With fewer homes likely to come to market in the next few months, inventory will remain constrained and hamper the pace of rebalancing.
  • This was also highlighted by the latest weekly update. With homeowners worried they missed the market’s peak, new listings declined for the 11th consecutive month.
  • This week, we also released the August rental report, which underscores that affordability continues to worsen. While the median rent dropped from last month’s record-high, it took a bigger bite out of a typical household’s income, just as families juggle rising prices, borrowing costs and wages falling behind inflation.
  • Stay well this week! We’ll keep you in-the-know at our website and Twitter feed, until next week’s update.
  • You’ll find the details along with our housing data for download at And follow us on twitter for real time updates.

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George RatiuGeorge Ratiu

George Ratiu