Commentary 
The housing market in the United States is practically in a state of collapse. In April, the sales of new homes fell by 16 percent. At the same time, prices soared to a new staggering record of $570,000, way above the pre-pandemic level of around $390,000. That’s an increase of over 46 percent in just two years! How did that happen?
It all relates to the massive role the Federal Reserve and the U.S. government took in the economy during the pandemic. As explained in my previous article, the Fed took an unprecedented role in the U.S. financial markets during the pandemic. The U.S. government issued three rounds of stimulus checks during the pandemic: $1,200 in April 2020, $600 in December 2020/January 2021 and $1,400 in March 2021. These actions led to an inflation shock and an asset market “mania,” but in addition, they fed the real estate market “bubble” by lowering the price of lending and by (artificially) upholding consumer spending. Now, interest rates have risen, and will rise further, and the housing market is “cratering.”…