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Fed’s Powell: U.S. housing marketplace headed for ‘correction’

U.S. Federal Reserve Board Chairman Jerome Powell attends a news conference after Federal Reserve raised its target interest by three-quarters of a share point in Washington, U.S., September 21, 2022. REUTERS/Kevin Lamarque

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Sept 21 (Reuters) – Federal Reserve Chair Jerome Powell on Wednesday said the U.S. housing marketplace will probably proceed through a “correction” over time of “red hot” price increases which have put home ownership out of grab many Americans.

“There is a large imbalance … housing prices were increasing at an unsustainably fast level,” Powell said at a news conference following Fed’s decision to improve its policy rate by another 75 basis points. “For the long run what we are in need of is supply and demand to obtain better aligned so housing prices rise at an acceptable level, at an acceptable pace and folks are able houses again. We probably in the housing marketplace have to proceed through a correction to obtain back again to that place.”

The Fed’s rate hikes this season experienced their biggest effect on the housing sector, slowing sales and bringing prices a little lower. Shelter inflation will stay high for quite a while, Powell said.

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Reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Leslie Adler and Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.

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