Federal Reserve Governor Predicts Sluggish Home Sales

Despite January’s surge in house sales , Federal Reserve Governor Michelle Bowman predicted Monday that sluggish wage growth combined with high inflation and increasing home prices will prevent many Americans from entering the housing market.

“With wage growth lagging behind inflation for the past year, many families may find it challenging to make ends meet and continued rising home prices will likely prevent many from entering the housing market,” she said at an American Bankers Association conference in Palm Desert, Calif.

“We may see signs of inflation easing in the second half of the year, but there is a substantial risk that high inflation could persist,” Bowman said.

With inflation at 7.5 percent, the Federal Reserve Governor said she supports raising the federal funds rate, which Federal Reserve Chairman Jerome Powell has said could happen as early as next month.

The federal funds rate is the interest rate commercial banks charge one another for overnight loans and is considered a tool to temper inflation. The rate is determined by Federal Open Market Committee (FOMC), of which Bowman is a member.

The National Association of Realtors reported in February that existing-home sales in January increased 6.7 percent from December 2021.