By Kathleen Madigan | The Wall Street Journal
The U.S. Federal Reserve has put a lot of its eggs in the housing basket. After all, a healthy housing sector brings benefits to the economy. Home-building provides jobs, mortgage financing offers revenue to the banking system, and households feel more financially secure if the value of their home isn’t freefalling into the abyss.
By keeping mortgage rates super cheap, the Fed has propped up housing demand. And after years of few projects, builders are breaking ground on more homes.
Tuesday brought news that housing starts in May rose 6.8% to an annual rate of 914,000. While much of the gain came in apartment projects, single-family homes edged up 0.3% to 599,000.
Some fret the recent rise in mortgage rates could scramble the Fed’s goal. The 30-year fixed rate edged up to 4.15% last week. What is the impact if the 30-year fixed rate jumped from its recent low of 3.5% to 4.5%?
