Real estate stocks are rising following Federal Reserve Chairman Jerome Powell’s dovish comments at the Jackson Hole Economic Symposium on Friday that hinted at impending rate cuts that could impact mortgage rates, along with surprisingly strong new home sales data for the month of July.
As the U.S. housing market needs relief, HousingWire senior analyst Logan Mohtashami joins Market Domination to discuss the potential impact of a rate cut on the housing market.
Mohtashami distinguishes between two segments of the real estate market: new construction by developers and the sale of existing homes. He explains that when interest rates fall, developers “can sell homes like a commodity,” while existing homes “don’t have that opportunity.” Existing homes are difficult to sell because the market hasn’t seen mortgage rates below 6% for quite some time, Mohtashami explains.
“I think builders will always have an interest rate advantage until mortgage rates for the existing home market fall significantly below 6%,” Mohtashami tells Yahoo Finance. “If mortgage rates fall 2% and actually stay below 6%, the existing home market could gain momentum.”
Click here to watch the full episode of Market Domination for more expert insights and information on current market events.
This article was written by Angel Smith
