Housing activity levels could move Fed to act: Economist

Macquarie head of economics David Doyle joins Catalysts to explain why housing activity levels such as home sales, renovation activity, and housing under construction could have a significant "feedback effect" on Federal Reserve policy.

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This post was written by Nicholas Jacobino

Transcription de la vidéo

From your perspective, as mortgage rates do continue to fall back.

Could that sort of have a reverse effect and make the fed's job harder by fueling price gains in the broader housing market?

II, I do think that mortgage rates are important to watch uh in so far as there is a feedback effect on on Fed policy.

Um I I'm not so sure it will operate through their any concern with regards to house prices.

Um but I do think there'll be a read through to housing activity levels.

So things like home sales, things like renovation activity, um housing under construction, those could show, you know, a AAA significant response in a positive way if you see mortgage rates decline much further.

And, and I think that creates an upside risk, uh you know, going forward.

So it is something to watch in terms of mortgage rates.

Uh just because II I suspect given how low housing activity has fallen relative to what's a normalized level, there's ample scope for it to rebound if the rate drops prove sustainable.