Housing Shakes Off Pandemic’s Drag but Employment Report Sends Warning Signals

If home sales alone were an indicator of economic health, you might conclude that the economy has rebounded smartly from the pandemic-induced recession and is on a path for steady growth.

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The Federal Reserve left interest rates unchanged at is April meeting, but remains on course to boost rates at least twice before the end of this year.

Concerns about rising interest rates and shrinking inventories, bubbling beneath the surface of real estate discussions for much of last year, have boiled over, dominating recent news reports and raising questions about the outlook for this year.

Although the employment numbers for March fell below expectations, disappointing many analysts, the Fed isn’t expected to alter its plan to boost interest rates at least twice and maybe three more times this year.

Year-end housing reports reflect two competing narratives. The first: Soaring prices and strong sales producing the best housing market performance in more than a decade. The second: Higher prices, rising interest rates and skimpy inventories combining with troubling signs that millennials are losing faith in the desirability of home ownership and/or the possibility of achieving it.