The Fed Is Driving an Unusual Contradiction in the Housing Market

Barrons, Sept. 15, 2022–Susan Wachter (subscription)
The U.S. housing market has entered an unusual and confusing phase. House prices and rents year-over-year continue to grow at historically high rate. But construction and sales activity are at the kind of lows that normally characterize a recession. Rents and housing-cost equivalents are more than 40% of the consumer price index and their rises are big contributors to inflation. Despite high prices, developers are walking away from deals, and firms are halting production mid-process.