What Fixed The Broken Housing Market? Higher Mortgage Rates Says San Francisco Fed | Global News Avenue

Higher mortgage interest rates may make buyers more difficult, but in fact they may help recover the balance of housing markets that have been in trouble for many years.

The changes in the period of popularity have distorted the housing market. While the inventory is dry, the price is high. Although higher interest rates have promoted the cost of borrowing, the latest report from the San Francisco Fed shows that higher interest rates have brought a certain balance to the market.

Economist John Mondragon proposed by San Francisco, Adam Shapiro and Valeska Kohan, “Our analyst shows that strong demand for our analysis shows that” our analysis shows that our analysis shows that It is the main driving force for low inventory during the popularity period. Since then, the demand for net housing with increased mortgage rates has gradually returned to a more typical level. ”

This report as some housing data, such as Supply of housing inventory increaseHave begun to improve. However, the interest rate of mortgage loans is still rising, some Economists predict further trouble For the market in 2025.

How did we get here?

There is a delicate balance between house sales and new lists. During the popularity period, the growth rate of sales is much faster than the new listing, pushing the house price higher.

But this is now changing. The report indicates The list of housing has been greatly returned By 2013 to 2019, the pre -pre -level level. However, these inventory levels are relatively low and slower than the past year.

Economists wrote: “Although there is no clear consensus on the main reason for this decline, because the financial crisis may be an important factor, housing construction continues to weaken.”

How to help higher mortgage interest rates?

According to the San Francisco Fed, this recovery of housing inventory may be higher mortgage interest rates that suppress demand.

Not only the higher price makes the house a house AffordableBut many existing The homeowner hesitated Putting their houses in the market locking To their previous low rate. This is transformed into less lists and low inventory.

Mortgage rate As the Fed began to increase its influential federal capital interest rates in 2022 to help resist inflation, thereby increasing the cost of borrowing the entire economic loan, so movement is higher. After immersion Last fall, decreased last fall, According to the latest mortgage bank association data, by the end of this year, the mortgage interest rate has reached almost 7 %.

“It is unclear whether the Federal Reserve has not improved the interest rate to strengthen the policy, and whether the housing demand will remain strong. However, the decline in housing turnover and the increase in the increasing mortgage rate interest rates indicate that there is a causal relationship.”

San Francisco’s Federal Reserve economist said that with the supply and demand power of the housing market, the differences between listing and sales will be a key indicator of monitoring the health of the housing market.

“The decline in mortgage interest rates may re -ignite housing demand to update inventory. On the other hand, if conditions support the increase in new buildings, it can increase housing inflow and reduce inventory restrictions,” they wrote.