The Federal Reserve is counting on its most powerful weapon to ensure price stability --interest rates. Past hikes haven't made much of a dent. However, it can take several months for the effects of rate hikes to be felt in the real economy. Mortgage interest rates, which are heavily influenced by the Fed's key rate, have more than doubled.
As Fed vice chair Lael Brainard commented this week, "The moderation in demand due to monetary policy tightening is only partly realized so far."
"We continue to see a tale of two economies in the data," says Freddie Mac's chief economist, Sam Khater, "Strong job and wage growth are keeping consumers' balance sheets positive while lingering inflation, recession fears, and housing affordability are driving housing demand down precipitously."