Breitbart Business Digest: The Housing Market Shows Interest Rates Are Too Low

has once again taken to the digital penit to if the Federal Reserve’s monetary policy were all that restrictive.Housing is considered one of the most interest-rate-sensitive segments of the economy

Here’s how that works. When the Fed raises its target for overnight interest rates for loans between banks, this tends to raise yields on longer term bonds because these are essentially just a series of short-term loans. Because mortgage-backed securities are a somewhat close substitute for Treasuries,Higher interest rates make buying homes less affordable. They can either depress home prices or at least slow down the rise in prices by reducing demand.

Minneapolis Fed President Neel Kashkari speaks during an interview in New York on Nov. 7, 2023. found that average one-year-ahead home price growth expectations increased to 5.1 percent in February 2024 from 2.6 percent in February 2023. While that is lower than the 2022 series high of seven percent, it is alsoover the 12 months through March. While the month-to-month increases fell sharply in the first half of last year, over the past seven months they have been in a range of 0.3 percent to 0.

In other words, rates might not be as restrictive as many Fed officials and Wall Street economists think. And that, in turn, suggests that rates might need to be higher if they are going to do the job of taming inflation.

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