Rather than raising interest rates this Wednesday, the Federal Reserve held rates steady at an average 6.95%, and though experts say a sharp decline isn’t likely in 2023, slower inflation could send rates into the low 6% range by the end of the year. Home prices are also expected to fall during the next six months as housing activity slows and shelter inflation eases.
Inflation rose 4% year-over-year in May, and while that’s double the Fed’s 2% target, it’s below April’s 4.9% year-over-year jump and is a major drop from the 9.1% surge seen last June, Realtor.com reports.
“Activity in the housing sector remains weak, largely reflecting higher mortgage rates,” Fed Chair Jerome Powell said during a Wednesday press conference. “Certainly, housing is very interest rate-sensitive, and it’s the first place, really, or one of the first places, that’s either helped by lower rates or is held back by higher rates. And we certainly saw that over the course of the last year. We now see housing putting in a bottom and maybe moving up a little bit. We’re watching that situation carefully.”
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