July New Housing Plummets to 6 1/2 Year Low

Feds raising the federal rate has actually helped keep mortgages rates from going into the 7s.
In fact, mortgages rates the past few days have spiked up some due to fears Feds might already start slowing down rate increases. Inflation which is a massive threat to our economy is why mortgage rates jumped so fast this year.

 

This whole phenomenon is one reason why once inflation gets rolling it takes a while for cpi inflation to come down. As interest rates go up, demand on most goods go down, lowering inflation. The same is true for houses, but house prices aren’t part of inflation. Rents are. Rents are partially a financing transaction, so higher interest rates make rents go up, increasing cpi rent inflation, and housing is a big chunk of inflation. Add to that cpi rent inflation lags approx 6 months because consumers don’t experience rent inflation until their lease renews. Eventually interest rates stop going up and rent inflation stabilizes too, but it is easy to see how that could take a year to 18 months.