Housing Industry Has Bigger Worries Than Federal Reserve Rate Hikes

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Decreasing supply is a far greater concern to the housing economy

 

September 22, 2016

The Federal Reserve in Washington, D.C. Photo: Stefan Fussan/Wikimedia Commons

An increase on rates from the Federal Reserve would not spell doom for the housing industry.

Diana Olick of CNBC wrote a Q&A explaining that home inventory, which has continued to fall and is now near record lows, is a greater issue. Low supply is causing prices to rise even more.

Olick writes that a Fed rate hike won’t necessarily cause mortgage rates to spike, and that mortgage rates will remain low even if an increase does occur.

Q: I heard somewhere that if the Fed hikes rates it could actually be a good thing for housing. Is that true?

A: In the big picture, yes. The Fed raises rates when it feels like the economy is strengthening, and a strong economy is good for housing. Income growth, job growth, consumer confidence — all of these help people buy homes.

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