/biz/ - Business & Finance

The sector that has seen the most significant slowing is housing. New home construction and new and existing home sales, which grew strongly before and during the pandemic, have all fallen in 2022. As purchases of homes fall, so does demand for goods that typically accompany purchases—new carpeting, new furniture, new lawn mowers and so on. So slowing home sales will decrease demand for goods that complement the purchase of a new home and that will put downward pressure on the prices of those goods.

Furthermore, housing prices that were increasing at an annual rate of 20 percent as late as May slowed to about a 2 percent rate in October, according to data from Zillow. Housing may be the first but won't be the last sector of the economy where higher interest rates will have the effect of dampening demand and will ultimately help moderate price increases. Our goal is to rein in demand, bringing demand and supply into better balance, which will help reduce upward pressure on inflation.