With the Fed poised to wrap up its tightening campaign — perhaps next week — mortgage rates have probably peaked.
| Bloomberg
Ellen Zentner, the chief US economist at Morgan Stanley who has stuck to her call for a “soft landing” even as many others have thrown in the towel, says it may save the economy. , as many existing homeowners with low mortgage rates aren’t listing their properties. That’s kept sales of previously owned homes depressed, but they’re also starting to turn the corner — those sales in March were 11% above January’s low.and home prices could bring in more buyers. The S&P CoreLogic Case-Shiller index of prices in 20 US cities in February was nearly 5% below last year’s peak, according to data published Tuesday. They jumped more than 40% from June 2020 to June 2022.
In the first quarter, “residential investment likely will subtract from growth for an eighth straight quarter, although the housing market appears to have bottomed. We estimate a negative contribution of 0.2 ppt, vs. an average of -1.2 ppt over the prior three quarters.
Still, Feroli cautioned that a wave of construction layoffs “is maybe just beginning,” pointing to the increasing length of time it’s taken in recent years to build homes. That means a decline in new projects can take longer to have an impact on employment than in the past.
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