By Kristin Myers, Editor-in-Chief

What's Happening Today

In testimony before Congress today, Federal Reserve Chair Jerome Powell said that the Federal Reserve is "strongly committed" to fighting inflation. Markets are now pricing in an 89% chance that the Fed's aggressive stance will result in another rate hike by 75 basis points in July, according to CME Group's FedWatch tool based on fed fund futures data.

The Fed's commitment to slowing rising prices is also raising recession concerns. Earlier this week, economists at Goldman Sachs lowered their growth forecasts for U.S. gross domestic product (GDP) and raised their estimate for the risk of a recession over the next year to 30%, up from 15%. The chance of a recession over the next two years is now 48% (up from 35% earlier), according to economists at the investment bank.

While a recession is not guaranteed, economists and business leaders say an economic downturn by the end of the year or early next year is becoming increasingly likely. Speaking to Congress, Powell tried to soothe fears, telling legislators that the U.S. economy is "very strong" and could handle more aggressive moves from the bank.

Even as the Federal Reserve is looking at hiking interest rates further, mortgage applications increased 4.2% for the week ending June 17, according to the Mortgage Bankers Association. Applications for adjustable-rate mortgages (ARMs) also surged, rising to 10.6% of total mortgage applications as borrowers sought to lower their cost of borrowing. Unlike a traditional, fixed-rate mortgage, the interest rate on an ARM can vary, but typically requires lower payments during initial years.

The average mortgage rate on 30-year fixed rate mortgages is sitting near 6.3% according to data collected by the Balance, and future rate hikes from the Fed would cause mortgages to get more costly. While some buyers may be trying to secure a home loan before rates increase even more, refinancing applications continue to drop as rates rise. Applications to refinance mortgages decreased 3% since last week, and are 77% lower than they were last year.

- Kristin

Editors' Picks

Powell Tells Congress the Fed is 'Strongly Committed' to Bringing Down Inflation (CNBC)

Home Sales Drop to 2019 Levels As Pandemic Boom Fades (The Balance)

Could a Housing Slump Threaten the Stock Market and the Entire Economy? (CNN Business)

Deutsche Bank, Citi See 50% Recession Chance as Rates Rise (Bloomberg)

More Companies Start to Rescind Job Offers (The Wall Street Journal)

US Economic Indicators Get Hard to Decipher as Recession Risks Grow (Bloomberg)

Wondering How Much You Need To Retire? Here's How To Figure It Out (The Balance)

How Trans and Nonbinary Homebuyers Can Navigate Mortgage Applications (The Balance)

Off the Charts

The high-flying pandemic-era housing market is finally falling back down to earth—at least in terms of the number of homes being sold. Sales of existing homes fell 3.4% in May, a fourth straight month of decline that brought sales down to a seasonally adjusted annual rate of 5.41 million, on par with pre-pandemic levels, according to the National Association of Realtors.

Number of the Day

$407,600 - That's how much the median existing home sold for in May—a new record and evidence that the housing market slowdown has yet to restrain soaring prices.