You're on an island with five chairs. There are four people. Everyone has a chair.
Add six people. There are now five chairs and ten people. How can you manipulate the prices of chairs such that all ten people can have their own chair?
Artificially lowering the prices of chairs does not solve the underlying issue: There are not enough chairs for everyone that needs one.
By treating housing price surges as excessive demand (raising mortgage rates), you lower demand not only for _existing_ homes, but also for creating new homes. If your goal is to ensure that housing prices always go up and affordability/homelessness go in wrong direction, the Federal Reserve's policy is very effective.
They're wrong to prematurely kill demand before it can cause new housing construction to increase, fixing the underlying issue of not enough supply.
You're missing the people who have multiple chairs and are sitting on chairs hoping that price goes up who would be incentivized to sell (look at supply coming online as mortgage rates rise - and any similar pattern - i.e. 2018).
Price always going up makes chairs attractive to hold, which results in misallocation of chairs - ideally you want them to go to whoever wants chairs the most, not whoever grabbed a chair first.
Yes, the best answer is to make more chairs, but that is not something that the FED has much control over (it's federal/state/local zoning policy and regulation which prevent more supply).
The question the FED can address is not "how can we make sure everyone has a chair", but rather "how do we make sure that the existing chairs go to the people that need chairs the most"
Yeah, not really sure what the original commenter was on about... The price of money itself is higher when rates go up, so prices of goods and assets must go down to compensate for reduced demand
Rates rising drives prices down. Of the mortgages on their books. And of the homes collateralizing them.