Whenever the Federal Reserve moves into quantitative tightening mode, it's going to spell trouble for rate-sensitive sectors like the U.S. housing market. When that tightening turns aggressive because the central bank—under the mistaken belief that inflation would be "transitory"—fell behind on its inflation fight, the trouble would only be that much more intense.
Of course, that's exactly what happened to the U.S. housing market: As the Fed worked to play catch-up on taming inflation, its quantitative tightening this year spurred the biggest mortgage rate shock—with the average 30-year fixed mortgage rate moving from 3% to over 6%—since 1981.
