The Balance Today: News You Need To Know on Nov. 17, 2022

Inflation is easing, but will the Fed pull back on rate hikes?

A construction worker stands atop a new home under construction.

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Investors will be hearing from several policymakers from the Federal Reserve today, and will be paying close attention to their thoughts on inflation, the economy, and the future path of rate hikes. The central bank is set to kick off another policy meeting next month, and while declining inflation has renewed optimism the Fed won’t hit the economy with another massive rate hike of 75 basis points, hawkish comments from Fed presidents could take a swing at those hopes. 

In remarks this morning, St. Louis Fed President James Bullard said rate hikes to date have only had a “limited effect” on inflation, and said more rate hikes would be needed to bring inflation down. Markets have been falling today as investors grapple with the possibility of higher rate hikes in our future.

Higher interest rates hurt everyone, even if you’re not watching markets closely. Not only could it sting your retirement accounts, but it also makes borrowing money much more expensive. So far Fed rate hikes have sent the average interest rate on a 30-year fixed-rate mortgage soaring to more than 7%, the highest it’s been in two decades.

That has put pressure on the real estate market, which has been red hot throughout the past two years. But as interest rates on home loans have skyrocketed, prospective buyers have been choosing to sit and wait as the cost of purchasing a home has become too expensive. Today the Census Bureau released its latest figures on housing starts, or the number of new homes being built. New residential home construction dropped 4.2% from September, and was 8.8% lower than last year. Permits to build new homes also dropped last month, and were 10% lower than in October of 2021.

If you’re interested in buying a home this is both good news and bad news. Lower housing supply has in part fueled higher home prices. But with so many buyers choosing to wait, sellers may be more willing to negotiate and lower their asking price.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Freddie Mac. “Primary Mortgage Market Survey.”

  2. Census Bureau. “Monthly New Residential Construction, October 2022.”

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