The Housing Market's Rebound Is No Mirage
Real estate can be a lagging indicator, but recent reports suggest it will continue to underpin the U.S. economy.
Lower interest rates are giving housing construction a boost.
Photographer: Bloomberg
One place where the Federal Reserve's “mid-cycle adjustment” is playing out according to script is in the housing market, which at 15% is the single-largest contributor to the U.S. economy.
Housing is the most interest-rate sensitive sector of the economy, meaning it stands to benefit more than any other from the Fed having cut its target interest rate by a half a percentage point since July. Indeed, mortgage rates have fallen by more than a percentage point over the past year in anticipation of the Fed easing, providing much needed relief to a residential real estate sector that contracted for six straight quarters through June.