Fed rate hikes caused mortgage rates to surge this week more than they have in the last 36 years, according to data from Freddie Mac.

30-year fixed rate mortgages rose 1/2 point to 5.78%, the biggest rise since 1987. Freddie Mac says the headline rate is the highest since the housing crisis of November 2008.

The rise is due to the Fed hiking its benchmark Fed funds rate .75%, to between 1.5% and 1.75%, the biggest single day move since 1994.

Higher borrowing costs will slow down the housing market, and that should help cool down the economy. For now a lack of homes for sale and a slump in new building is keeping prices high.

Fed Chairman Jerome Powell said, “The supply of finished homes — the inventory of finished homes that are for sale is incredibly low –historically low… I would say if you’re a home buyer, you need a bit of a reset. We need to get back to a place where supply and demand are back together, and where inflation is down low again, and mortgages are low again.”

Housing starts fell in May by 14.4%, to an annual rate of 1.549 million. The Street consensus forecast had been 1.701 million. New construction permits also fell 7%, to 1.695 million, again well below market estimates.

Meanwhile real estate companies are not doing any better. Online realty company Redfin Corp announced it would lay off about 8% of its workforce, and said it is expecting, “years, not months, of fewer home sales.”

CEO Glenn Kelman wrote, “With May (homebuying) demand 17% below expectations, we don’t have enough work for our agents and support staff, and fewer sales leave us with less money for headquarters projects.”