While the overall number of 5.3 million seasonally existing homes sales was impressive, growing participation from first-time buyers is far more important for the health of housing.
Mar 27, 2015
Economic growth likely translates to expanding credit availability, better employment data and greater demand from first-time homebuyers and young adults.
Now that the Federal Reserve has removed “patient” from its forward guidance, investors need to think about what this means for 1) the trajectory of short-term interest rates and 2) the potential exit strategies for the Fed’s $4.5 trillion in holdings of U.S. Treasuries, Agency debt and Agency mortgage-backed securities (MBS).
National U.S. home prices have increased by over 27% from the bottom in early 2012, helping to improve consumer balance sheets and drive a strong recovery in a variety of housing-related assets. Going forward, we believe that analyzing the potential demand from young adults is critical to understanding the potential further upside in the residential sector.