Housing Industry Has Bigger Worries Than Federal Reserve Rate Hikes

Decreasing supply is a far greater concern to the housing economy


September 22, 2016

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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