Fed Searches for the Magic Number to Cool a Red-Hot U.S. Housing Market
The central bank must decide on an interest rate that will cap sky-high price growth without triggering a painful economic slowdown
America’s red-hot housing market threatens to make the Fed’s job tougher. With so many buyers competing for so few available properties, home prices in the U.S. rose 18.8% last year
Homeowners also have an incentive to stay put. Many don’t see where they can afford to move.
In April, the monthly mortgage payment on the typical home jumped to $1,475, assuming a 30-year fixed-rate mortgage with a 20% down payment, according to Zillow Group Inc.
That is up 34% since December and 53% from April 2021.
WSJ 24 May 2022
When the Federal Reserve set out to cool the economy and slow inflation in the past, it counted on the housing market to do much of the work.
By raising interest rates, the central bank made mortgages more expensive and trimmed the number of buyers. This time, America’s red-hot housing market threatens to make the Fed’s job tougher.
With so many buyers competing for so few available properties, home prices in the U.S. rose 18.8% last year
REAL TIME ECONOMICS
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