Housing Starts in U.S. Surge on Multifamily Unit Demand

Monetary Policy

“In the eyes of the Fed, the good news on inflation is going to give them plenty of comfort,” said RBS Securities’ Girard. “It’s all the more reason for them to stand pat and continue to provide the accommodation needed to support the economy.”

The Fed’s actions are among reasons housing is prospering. The average rate on a 30-year fixed mortgage fell to 3.43 percent in the week ended April 11 from 3.54 percent in the prior period, according to Freddie Mac. The rate reached a record-low 3.31 percent in November.

A rebound in home construction will aid the expansion. In the past six months, payrolls at construction companies have grown by 169,000 workers, according to Labor Department data. Residential investment bolstered U.S. gross domestic product by 0.27 percentage point in 2012, the first addition since 2005.

Fed’s Duke

“The economy does seem to be strengthening — particularly the housing market seems to be recovering at this point,” Fed Governor Elizabeth Duke said today at a Washington conference hosted by the American Bankers Association. “House prices are going up” though “a lot of that has to do with a shortage of houses on the market.”

At the same time, credit standards are still restrictive in the mortgage market, Duke said.

“Mortgage lending is a place where credit conditions really have not loosened at all — they’ve not loosened in the least bit,” she said.

The news on manufacturing wasn’t as good last month. Output (IPMGCHNG) at factories fell 0.1 percent in March after jumping 0.9 percent the prior month, according to figures from the Fed.

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