NEW YORK (MaceNews) – Continued moderate growth and a strong jobs market point to strength in the housing market, with key support from ongoing low interest rates, Federal Reserve Governor Michelle Bowman said Thursday.
Bowman, in remarks prepared for delivery to a homebuilders group in Kansas City, noted that the FOMC sees interest rates remaining at current low levels this year, given the economic outlook. She said factors, including low rates of housing formation and tight credit conditions, that slowed the housing market recovery earlier in the current expansion have now eased.
“The most recent housing data have been encouraging: Both new and existing home sales moved up strongly in the second half of 2019, and traffic of prospective buyers in new homes for sale and expected sales within the next six months have approached all-time highs,” she said. “Permits for new residential construction, which had been sluggish early last year, recently moved up to highs for this expansion. In all, the national indicators suggest a positive growth outlook for the housing sector over the next several quarters.”
Bowman noted two constraints to growth in homebuilding – shortages of qualified workers, and declining presence of community banks in the consumer real estate market. “These two challenges notwithstanding, I remain optimistic about the outlook for housing, Bowman said. She added “low interest rates will continue to be a key factor supporting growth in housing activity. As reported in the latest Summary of Economic Projections, released in December, most FOMC participants see the current target range for the federal funds rate as likely to remain appropriate this year as long as incoming information remains broadly consistent with the economic outlook ….”