With indications of a rebound in economic activity in the second quarter and “sufficient underlying strength” to support ongoing improvement in the labor market, Federal Reserve officials have raised the possibility of removing stimulus “sooner than…currently anticipated” but have no immediate plans to ease their current “accommodative” stance and raise the federal funds rate to a normal level.

And with respect to the Fed’s current take on the country’s housing market:

The recovery in housing activity remained slow according to most participants. Although mortgage rates were still low and housing appeared to be relatively affordable, various factors were seen as restraining demand, including low expected income and high levels of student debt as well as difficulty in obtaining mortgage credit, particularly for younger, first-time homebuyers.

It was also noted that the weakness in homebuilding along with the continued rise in house prices suggested that supply constraints were also weighing on construction activity. A couple of participants indicated that some demand appeared to have shifted to rental properties.

The rising demand for rentals was in part being satisfied by investors buying homes for the rental market; it was also providing support for multifamily construction. Some participants noted their concern that a number of the factors restraining residential construction might persist, damping the housing recovery for some time.

Recent Articles

Comments from “Plugged-In” Readers

  1. Posted by Jeff

    Doesn’t matter. The 10 year yield is at a year low now at 2.42%. Cheap money is here for a loooooong time.

Add a Comment

Your email address will not be published. Required fields are marked *