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Fall in demand in the housing market.

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The Market Glance for March 19: Shortage of Low-End Housing Slowing Down Market

Asif Imtiaz Mar 19, 2018

Almost all analysts at major investment banks and fund managers are certain that the policymakers at the Federal Reserve will be a buzzkill and hike rates in meeting this week. However, it is the shortage of affordable housing and rising mortgage payments that should worry investors who make investment decisions based on the broader macro environment.

The housing market was a source of distress for policymakers for the last two months as both existing and new residential home sales plummeted to new lows amid a lack of supply at the lower end of the market, as well as rising mortgage payments thanks to the increasing interest rates. While we still have a robust labor market and people with a desire to own homes, the lack of cheap housing units in the market will likely hold down sales in February.

To sum up, the good news is that builders started taking permits at a faster rate and we might see increased construction in coming months, which will further stimulate the overall economy.

Check out last week’s Market Glance here, in which investors were concerned about rising inflation in the economy.

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