Continuing its efforts to bring inflation back under control, The Federal Reserve raised interest rates another 75 basis points last week, matching the June hike as the largest increase since 1994.
In its July policy statement, the Fed acknowledged economic activity continues to slow signs of slowing.
National Association of Home Builders’ Chief Economist Robert Dietz recently wrote nearly every housing indicator reflects that slowing. Writing in the “Eye on Housing” blog, Dietz pointed out the industry has experienced seven consecutive months of decline in home builder sentiment, along with declines in single-family permits and starts, pending home sales and increased sales cancelations.
He noted that some market analysts are expecting a September rate increase of only 50 basis points, possibly showing increased confidence in the Fed’s efforts, “even if it means a recession in the so-called hard landing scenario.”
While acknowledging that the current set of circumstances does not meet all the criteria normally included in a formal declaration of recession by the National Bureau of Economic Research – particularly given the lack of an increase in unemployment – Dietz used the housing indicators mentioned earlier to support stating in no uncertain terms, “It is clear a housing industry recession is ongoing.” (Source)