On news of the interest rate hike, the stock market plummeted yet again. We are so used to hearing this news we’re nearly conditioned for this development without it evoking shock and outrage. The Federal Reserve, who coddled financial markets and allowed the easy money flourish, has now yanked the rug out from underneath those they used to protect. This will send the housing market in the cellar, rapidly.
The prolonged downturn in confidence shows the housing market has been “in a tailspin for the whole of this year,” according to Pantheon Macroeconomics chief economist Ian Shepherdson.
“Activity tracks mortgage applications with a lag, and the early September numbers are grim, even before the full hit from the rebound in mortgage rates in recent weeks works through,” Shepherdson said in a note to clients on Monday.
“In short, the housing market is in a deep recession, which is already hammering homebuilders and will soon depress housing-related retail sales,” he added.