Cheap money flood buoys US housing
America’s housing market keeps humming along, supported by Trump's aversion for high interest rates.
America's housing market "keeps humming along", says Paul La Monica for CNN Business. Builders' sentiment in October reached its highest level since February 2018, according to the National Association of Home Builders. With the Federal Reserve cutting interest rates, cheaper mortgages are likely to prompt more young renters to buy.
America is still far from a repeat of the mid-2000s boom that gave the world the sub-prime crisis. The data paints a picture of only "modest strength", says Laura Kusisto for The Wall Street Journal. The average national home price rose 3.2% in the year to the end of August.
Growth has been strongest in affordable markets such as Phoenix, Arizona. Prices in richly valued west-coast cities are stagnating. American homeowners have their "property-developer president" to thank for the buoyant market, say Prashant Gopal and Christopher Condon on Bloomberg. Donald Trump has a property tycoon's instinctive aversion to high interest rates. His trade war and endless harangues have forced the central bank to cut interest rates. Mortgage rates remain nearly as cheap as they've ever been despite unemployment that is at 50-year lows. That leaves the sector hooked on cheap money. But "if mortgage rates rise even modestly, the housing market will go from rip roaring to a deep freeze", says Mark Zandi of Moody's Analytics.