be persistently high. there has been a considerable imbalance in the supply and demand for housing for some time. housing is also sensitive to interest rates and thus quite responsive to monetary policy. so for the next few minutes, i would like to focus on how demand – supply imbalance in both owner - occupied and rental markets came about, how it is affecting prices for housing today and in future, and how housing is likely to affect the fomc's efforts to return inflation to our 2 percent goal. housing demand increased strongly in the years leading up to the pandemic, sustained by relatively low interest rates, the formation of new households, and rising incomes. demand for housing then surged during the pandemic as people spent more time at home, initially on the intensive margin - more housing square footage per household. couples in apartments wanted more space to work from home and opted for bigger apartments or houses. also, remote work enabled people to work from preferable locations so the demand for second homes surged. as the pandemic wore on, demand for housing also increased on the extensive margin - meaning more household formationas roommates sharing apartments now wanted to live on their own as they continued to work from home. and adult children began moving out of their parent's homes. all of these factors led to higher rates of household formation and greater demand for housing. so, by the end of 2021, the pandemic was driving up the demand for housing on both margins. meanwhile, the pandemic's supply constraints caused shortages in construction materials and construction workers, limiting the supply of new housing. the 2 / 6 bis - central bankers'speeches combination of soaring demand for housing and limited supply until earlier this year meant the housing market had substantial excess demand, which was reflected in substantial increases in housing costs. but now imbalances in the owner - occupied market have started to shift. due to the fed's actual and anticipated tightening of monetary policy, mortgage rates have increased from less than 3 percent at the end of last year to nearly 7 percent recently. higher borrowing costs have made it more expensive for households to buy homes, whether they are first - time buyers or trading their current home for a different one. and so, we have seen big drops in home sales over the course of this year. the monthly numbers of new and existing home sales are now back below the average levels seen in the few years before the pandemic. and the august decline in pending

xiang junbo : the establishment of the pbc shanghai head office speech by mr xiang junbo, deputy governor of the people ’ s bank of china, at the inauguration ceremony of the people ’ s bank of china shanghai head office, shanghai, 10 august 2005. * * * honorable general secretary chen, honorable mayor han, dear guests, ladies and gentlemen, today, we are here to celebrate the inauguration ceremony of the people ’ s bank of china shanghai head office. the setup of the pbc shanghai head office is an important decision made by the cpc central committee and the state council to further improve our central bank system in the new situation, an important institutional arrangement to enhance the role of the central bank in macroeconomic management, and also a significant initiative facilitating the building of shanghai into an international financial center. now let me, on behalf of the people ’ s bank of china, express our sincere gratitude to all departments of the cpc central committee, the state council, the cpc shanghai committee, shanghai municipal government and various social circles for your support in preparing the establishment of the pbc shanghai head office. since china adopted the reform and opening - up policy, and with the gradual improvement of the socialist market economy, the central bank system in china has been constantly improved. in 1984, the state council decided to have the pbc function as a central bank. the law of the people's republic of china on the people's bank of china passed by the third plenum of the eighth national people ’ s congress in 1995 legally confirmed the pbc's central bank status. in 1998, the cpc central committee and the state council decided to reform the administrative system of the central bank by dismantling provincial branches and setting up regional branches, which further strengthened independence of the central bank. as an integral part of the pbc head office, the shanghai head office will operate under the guidance and authorization of the pbc head office in beijing. its major responsibilities include part of the central bank operational functions and some of the administrative functions. the establishment of the pbc shanghai head office will help the central bank to further improve its decision - making and operational system, and strengthen its macroeconomic management capacity. since china ’ s accession to the wto, china ’ s opening to the outside world has escalated and the economy has become increasingly market - oriented. the consequent profound changes occurring in the financial industry have given rise to higher uncertainties in the economic and financial development, posing new challenges