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U.S. Housing Market Is Showing Remarkable Resilience

“The housing market has started to recover, and this is a problem for the Fed because more demand for housing will boost home prices and rents,” Torsten Slok, chief economist at Apollo, wrote in a note in May. “And housing is a big part of how the government measures inflation. This will make it more difficult to reduce inflation from 5% to the Fed’s 2% inflation target.”

With more demand than available supply in the real-estates market, home prices are kept high, but doesn’t mean for loss of demand if current conditions change.

According to Market Watch, when rates doubled from pandemic-era lows in 2021 to 7% last year, it zapped home-buying momentum. Although house hunters have adjusted their expectations, if rates were to jump from 7% today to even higher levels, “I would not be at all surprised if homebuyers stopped abruptly again,” Mike Simonsen, founder and president of real-estate analytics firm Altos Research said.

Americans broadly expect rates to go over 8%, according to a March survey by the New York Federal Reserve.

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