2024-05-08 11:00:00 ET
Summary
- Housing is among the most interest rate-sensitive sectors of the economy and also one of the most cyclical and crucial inputs for the business cycle.
- Housing prices are once more looking resilient after the Federal Reserve’s most aggressive tightening policy in decades and before rate cuts have arrived.
- One possible warning sign is that housing prices are again rising faster than the shelter component in the consumer price index in year-over-year terms.
Housing is among the most interest rate-sensitive sectors of the economy. It's also one of the most cyclical and crucial inputs for the business cycle. On that basis, one could reasonably expect that the sharp run-up in interest rates over the past two years would have crushed the trend in housing prices. For a while that was the effect, but the dramatic slide in the year-over-year change in US house prices is accelerating again. The reflation is moderate so far, at least compared with 2021-2022. But it's notable that housing prices are once more looking resilient after the Federal Reserve's most aggressive tightening policy in decades and before rate cuts have arrived....
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For further details see:
Will Housing Inflation Keep Interest Rates Higher For Longer?