This is a rough transcript of Jerome Powell’s remarks on housing during this week’s post-FOMC press conference. I apologize for any errors. Powell’s remarks on housing come around the 1:51 mark toward the end of the press conference. See video below.

It appears Jerome has finally figured out housing inflation is a serious headwind to the Fed’s efforts to curtail raging inflation. It makes you wonder what they were looking at for the entirety of 2021 when the Powell Fed was pretending inflation was transitory.

Question from Bankrate’s Mark Hamrick:

I Wonder what your assessment is about the outlook for the housing market given the years long increase in home prices, and now the sharp rise in mortgage rates. And all that, of course, given the heightened sensitivity around the housing market given the fact that it was a trigger for the Great Financial crisis over a decade ago, thank you?

Answer from Jerome Powell:

Rates were very low. A good place to start is that rates were very very low for quite a while because of the pandemic and you know the need to do everything we could to support the economy when unemployment was 14% and the true unemployment rate was well higher than that. So …

And that … that was a, uh, rates were low and now they are coming back up to more normal or above levels. So … in the meantime, while rates were low and while demand was really high … obviously demand for housing changed from wanting to live in urban areas to some extent to living in single family homes in the suburbs, famously. And so, the demand was just suddenly much higher. So we saw prices moving up very very strongly for the last couple of years.

So that changes now. And rates have moved up. We are well aware that mortgage rates have moved up a lot. And you know you are seeing a changing housing market. We are watching it to see what will happen. How much will it really effect residential investment? Not really sure. How much will it affect housing prices? Not really sure. Obviously, we are watching that quite carefully. You would think over time … There is a tremendous amount of supply in the housing market of unfinished homes … and as those come online …

Whereas the supply of finished homes, inventory of finished homes for sale is incredibly low. Historically low. So it’s a very tight market. So prices might keep going up for a while, even in a world were rates are up. So it’s a complicated situation and we watch it very carefully.

You know, I’d say if you are homebuyer, somebody or a young person looking to buy a home, you need a bit of a reset. We need to get to back to a place where supply and demand are back together and where inflation is down low again, and mortgage rates are low again.

This will be a process whereby, ideally, we do our work in a way were the housing market settles in a new place and housing and credit availability are at appropriate levels.

It’s a shame Jerome and his FOMC colleagues were too busy trading on their personal accounts to bother with prudent financial regulation. Maybe if they had spent more time looking at spiraling asset prices and heightened investor activity in the housing market during Covid, they would have started policy normalization a year sooner. Better late than never, I suppose.

It’s not like Powell and the army of economists employed in the Federal Reserve system couldn’t have seen this coming. Any sane person understands the official government metric of housing inflation from the Bureau of Labor Statistics is a severely lagged and poorly constructed measurement of real inflation in the real estate market.

Today we learned that housing permits and starts fell for the month May. Despite the monthly drop we reached a new record for the number of housing units under construction in the United States. The number of housing units currently being built is up 24.5 percent from the same time a year ago…right as Jerome pulls the rug on demand for homes. Go figure!