“When you have a rise and increase in interest rates like we’ve had, that is a big problem for housing. Interest rates are like the mother’s milk of housing,” Pulte Capital CEO Bill Pulte told FOX Business’ Maria Bartiromo Thursday. “And if you cut it off, you’re in big trouble. And when you’ve had these massive increases in interest rates, it just puts a lot of things to a stop.”
“It’s a tale of two cities. I hate to relate it to politics, but the more red states, places like Florida, Texas, the office buildings are pretty busy. Business is booming. There’s more demand and supply,” Thor Equities CEO Joe Sitt said later on “Varney & Co.” “It’s more, I hate to say it, markets like ours here in New York, Chicago, San Francisco is a ghost town. San Francisco’s been destroyed.”
One of the nation’s largest homebuilders, KB Home, released its Q4 report Wednesday which indicated more signs of housing weakness. According to the report, KB Home saw a 68% cancelation rate on new construction projects.
[This is precisely what the Federal Reserve wanted to do. They needed to cool demand through hiking interest rates, and the most direct impact this policy has is on big-ticket loans like mortgages and business loans. By cooling the housing market, it restricts the use of equity for other purposes, too. It would have been far better to have had deployed supply-side tax and regulatory policies instead, but the Fed had made money far too cheap for far too long anyway. — Ed]
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