During an interview on “Cavuto: Coast to Coast,” Friday, National Association of Home Builders CEO Jerry Howard discussed the housing market’s expected economic pivot following Federal Reserve Chair Jerome Powell’s signal for an additional interest rate hike.
JERRY HOWARD: Well, right now, I mean, obviously, 5.5% [mortgage rate] is better than 6%, but we’re afraid that it’s going to get up over 6%. Don’t think it’ll reach 7% this year, but we believe that it’s going to continue to go up. And so other options for adjustable rates, as you mentioned, are going to have to be put on the table if we’re going to continue to have home sales. But right now, there is so much downward pressure on us from the financing end.
Because you got to remember, when interest rates go up for the consumers, they’re also going up for the builders. And the ability to get money in capital to buy land and entitle the land and develop the land is also greatly impeded. It adds to the costs. That adds to the costs that the consumer has to pay. The mortgage adds to the cost, and pretty soon the demand is going to be quashed.
WATCH THE FULL INTERVIEW HERE: