Prices of existing homes in the US fell for the first time in 11 years in February, as home sales rose from January levels due to a drop in mortgage rates.
US Home Prices: Existing home prices in the US fell sharply for the first time in 11 years, breaking a one-year record for the lowest home sales, which has been linked to raising interest rates. federal Reserve Affects the campaign of. The National Association of Realtors said Tuesday that sales of previously owned homes rose 14.5% in February, but were down 22.6% from a year earlier. It is being speculated that the Federal Reserve may raise interest rates again this week to deal with inflation.
According to sources, the sale of houses has decreased for 12 consecutive months from the month of January last year. This helped buyers benefit from a modest recovery as home prices eased and mortgage rates declined from a 20-year record high. The national median existing home sale price fell 0.2% in February from a year earlier to $363,000. There has been a year-on-year decline since February 2012. The mortgage rate was above 7% in November, but fell to near 6% in early February before fluctuating in recent days.
Increase in interest rate going through the economy
The housing-market meltdown in the US over the past year reflects one of the main ways that the Fed’s aggressive interest rate hikes are rippling through the economy. Housing is one of the most sensitive economic sectors, and the highest housing cost has been a major contributor to inflation. The Fed is raising rates to fight inflation by slowing the economy through tighter financial conditions.
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Will the Fed raise interest rates again this week?
The collapses of Silicon Valley banks and Signature Bank and the acquisition of Credit Suisse Group AG by UBS Group AG have rattled the financial system and raised questions about whether the Fed will raise interest rates again this week. The two-day meeting of Fed officials ends on Wednesday. Investor concerns after bank failures helped mortgage rates slide for the first time in six weeks in the week ended March 16.
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Customers worried due to signs of slowdown in the economy
Any drop in mortgage rates is likely to spur a surge in home-buying activity, according to digital real-estate company Zillow Group Inc. But if customers in the banking sector are more worried about signs of a slowing economy, it could weigh on demand. can put. In a note to clients, Capital Economics said banks may also tighten lending standards, making it harder for home buyers to get mortgages.
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