Federal Reserve Chair Jerome Powell addressed concerns about inflation during a recent press conference, highlighting that while inflation has decreased in most sectors, housing prices continue to rise. Powell acknowledged that housing inflation has been slower to cool down than anticipated, but expressed optimism that the issues of high rent and home prices will eventually stabilize over time.
One of the key challenges in the housing market, according to Powell, is the limited supply of available homes. He emphasized that this is a factor beyond the control of the Federal Reserve. Powell also responded to worries that reducing interest rates could further drive up demand and prices, stating that the normalization of rates could help to balance the housing market.
Addressing the issue of supply, Powell raised the question of where additional housing supply would come from. While acknowledging the limitations of the Fed's ability to directly influence housing supply, he suggested that as interest rates return to more typical levels, the housing market could see a more balanced cycle.
