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Home Sales Hit a Record Low, Warsh Might Have the Cure
Yahoo Finance • • business
Key Points:
- The American housing market contracted sharply in September, with contracts falling 7.3%, marking the slowest pace since 2001 and surpassing economists' expectations of a 0.5% decline.
- Builders are reducing prices and scaling back construction, with 43% cutting prices in October and permits for new houses dropping 4%, while apartment construction has decreased by about 25% compared to last year.
- The 30-year mortgage rate has risen to 7.4%, over a percentage point higher than a year ago, driven largely by bond market reactions to inflation, oil prices, and geopolitical risks rather than Federal Reserve policy alone.
- The Federal Reserve is expected to consider a quarter-point rate hike in late October to signal commitment to controlling inflation, which could help stabilize mortgage rates by reassuring bond investors despite the risk of short-term rate increases.
- Continued rises in crude oil prices remain a significant factor influencing bond investors and mortgage rates, potentially undermining efforts to lower borrowing costs even if the Fed pauses rate hikes.
