Article source: ConstructConnect
In the U.S., the Federal Reserve has just raised its key policy setting interest rate, the federal funds rate, into a range from 3.00% to 3.25%. The intent is to cool inflation, which is +8.3% year over year for the Consumer Price Index (i.e., CPI-U, with U standing for urban consumers). The U.S. ‘core’ inflation rate is +6.3%. ‘Core’ leaves out price-volatile energy and food items.
A higher interest rate regime is meant to stamp out excessive consumer spending. But it’s also known, through corresponding bumps in mortgage rates, for almost always having a detrimental effect on residential real estate demand and new home construction.
