What effect will an interest rate hike have on America’s housing market? A new article from Forbes highlights that a reasonable rate hike by the Federal Reserve is a reflection of strong economic growth. And the housing market, like the rest of the economy, will not only survive – it will also thrive.
The conventional wisdom holds that the housing market suffers when rates rise, causing affordability to drop. But the housing market isn’t nearly as weak as most experts claim it is. The foreclosure rate has dropped rapidly since its peak. The legacy of housing distress is quickly disappearing. And the housing market is forging ahead on the strength of an improving economy.
Between February 2014 and February 2015, the number of new homes sold rose by rose by 24.8%. Existing-home sales were up were up 4.7% over the same period. Best of all, the median existing-home price was nearly $203,000 in February 2015 – more than 7% higher than it was the year before.
Put another way, the housing market is healthier than it has been at any point in recent memory. There is no better time for the Federal Reserve to end this unprecedented period of low interest rates.
