Interest rate–sensitive sectors like housing, while they’ve felt the drag of the past Fed actions, have started to recover in some regions, and financial conditions, you know, most recently were easing…. We now see housing putting in a bottom and maybe even moving up a little bit.
— Fed Chair Powell, June 14, 2023
One of the questions we continue to get from clients more recently has been, what the heck is happening with the housing market? The most recent data on new home sales and housing starts has far surpassed expectations to the upside, and homebuilder confidence has shifted back into positive territory. Fed Chair Powell also remarked on this resurgence at the June FOMC meeting. Given that housing is one of the most interest-rate-sensitive sectors of the economy, and with mortgage rates jumping from 3.0% to 7.2% today and affordability extremely low yet sales and starts jumping, in this Economics Weekly, we once again look at what’s happening with housing.
Richard de Chazal, CFA, is a London-based macroeconomist covering the U.S. economy and financial markets.