CHICAGO (Reuters) – If you’re weary of watching the stock and bond market get dyspepsia over the Federal Reserve’s possible pullback of its easy money policy, turn your gaze to the U.S. home market. Rising interest rates could be a catalyst to boost sales and prices.
In January, the average 30-year mortgage rate, as tracked by Freddie Mac, was 3.34 percent. In the most recent survey, the rate jumped to 4.46 percent, up more than half a percentage point from the week before.
While that is still a bargain by historical standards – the benchmark rate averaged about 8 percent in 2000 – the summer buying season combined with the possible end of the Fed’s easing policy will move millions of buyers into the home market.
Those who are still on the fence about buying a home will be worrying that rates will soar higher. Mortgage rates are still relatively low, so “fear of regret” will push them into purchasing.
Overall, the outlook for U.S. housing continues to improve. U.S. home prices posted the biggest gain in seven years in April, according to CoreLogic, up 12 percent from April a year ago.