Fed Rate Cut Good for Housing
From NAHB Now
In a policy change widely expected and good for housing and home building, the Federal Reserve on July 31 reduced its key, short-term federal funds rate by 25 basis points to a top rate of 2.25%. The housing sector continues to face affordability headwinds, and today’s action by the Fed will help by reducing borrowing costs.
The evolution of the central bank’s policy over the last three quarters is an important reason why mortgage interest rates have declined from late-2018 cycle highs. Given that the housing market faced a 10-year low for housing affordability last fall, the Fed’s approach is a net positive for future housing demand and home construction, while offering an offset (but only a partial one) for rising construction costs.