Equities | Monetary Policy & Inflation | US
Don’t Fight the Fed on Housing
- By John Tierney
- 3 min read
At the recent post-meeting Fed press conference, Chair Jerome Powell noted the strong housing market and rising house prices and suggested the trend would soon pass. He attributed it largely to people making adjustments to their housing situation due to the coronavirus crisis.
First, on housing, both existing and new home sales have surged powerfully in the second half of 2020 (Charts 1 and 2). Housing starts have surged to 1.4 million units on an annualized basis after spending nearly 15 years mired well below 1 million. Home prices jumped 9%, according to the respected Case Shiller National Housing Price Index. The National Association of Realtors’ median price index is up 15%. Both indices recorded annual gains of around 4-5% for the previous seven years.
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