Will Federal Reserve Increases Impact Residential Construction?

In recent years, the residential construction industry has shown great strength not only due to the demand for housing, but also because of consistently low interest rates.  With the Federal Reserve raising interest rates and potential further increases to come, what does that mean for the housing market and, in turn, residential construction?

Contrary to popular belief, rising interest rates actually may not signal a downturn in the housing market and residential construction.  According to some experts in the industry, housing demand still remains high due to the low levels of inventory and production that were borne of the recession in the late 2000s.  In addition, increasing wages and low unemployment levels over the past few years have offset the impact of increasing interest rates and higher construction costs. 

According to the federal government, new home sales in May were better than anticipated, and corresponding gains were noted at construction and home-improvement stores like Home Depot and Lowe’s.  For those who were concerned about facing construction issues due to a forthcoming downturn in the housing industry, recent results point to a healthy and stable market.

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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