Illustration: Lindsey Bailey/Axios
Housing is one of the few areas of the economy where the impact of monetary tightening is on vivid display. The surge in interest rates this month could cause a new wave of pain in the sector, however.
- As Axios Markets' Emily Peck recently wrote, there have been signs of a reawakening in the housing market to start the year, after taking it on the chin from the Fed's moves in 2022.
- Indeed, homebuilder sentiment rebounded sharply for the second straight month as mortgage rates drift lower. That offered at least some reprieve to buyers, according to a long-running survey by the National Association of Homebuilders.
By the numbers: The recent surge in yields, however, could freeze out that activity rebound. The average 30-year fixed rate mortgage rate was 6.78% yesterday, according to Mortgage News Daily, up from 6.04% on Feb. 1.
- That's still below the recent highs of over 7% seen this past November, which caused a contraction in home-buying activity, but not by much.
Yes, but: The improved outlook on jobs and wages to start the year might make potential homebuyers more willing to take on a mortgage than they were in the fall, when recession talk was at a high ebb.