The Federal Reserve is an institution in transition

Marketplace

News, Business

4.6 • 8.5K Ratings

🗓️ 27 February 2023

⏱️ 28 minutes

🔗️ Recording | iTunes | RSS

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Summary

The Federal Reserve’s original job was to help the U.S. avert financial meltdowns. But propping up the pandemic economy forced the central bank to do some “soul searching.” Today, we’re joined by The New York Times’ Jeanna Smialek to examine the Fed’s history and its shifting role in the modern economy. Also, recession predictions are all over the map, and low housing inventory fuels new home construction.

Transcript

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0:00.0	Home is where the heart is, yes, it is also where the money is from American public media.
0:11.0	This is Marketplace.
0:22.0	In Los Angeles, I'm Kai. Rizdala is Monday to the day the 27th of February.
0:27.0	Good as always to have you along everybody. We bring you at the top of the program today from the National Association of Realtors,
0:33.0	the Pending Home Sales Index, a measure of contracts signed to buy homes to find here as existing single-family homes, condos and co-ops.
0:45.0	We will get, actually later on in the program, to what makes a home a home.
0:50.0	But to the housing news of the day, the Pending Home Sales Index was up 8.1% in January, that is to say the second straight month of more contracts signed.
1:01.0	And the number of existing homes on the market is improving as well, even though by historical measures, it is still really, really low.
1:10.0	And that tight inventory is bad news for would be home buyers.
1:15.0	But you know who it is, good news for? Home builders. Marketplace in Matt Levin has this one.
1:21.0	There's always about a zillion reasons not to move, renting that unwieldy truck, fumbling with that weird packing tape dispenser that never works.
1:29.0	And for homeowners who refinanced during the pandemic housing boom, reason one zillion and one is pretty compelling.
1:35.0	Rafe Jadrasich covers the home building industry for Bank of America.
1:40.0	So over 80% of current homeowners now have a mortgage rate under 4%.
1:45.0	Which makes the prospect of financing at today's rate of 6.5% on a 30 year fix? Not so enticing.
1:52.0	The incentive for existing home inventory to come on the market is really, really low right now.
1:58.0	So we'd expect existing homes sales remain under pressure and pushing more people on to the new home market.
2:06.0	The home builder toll brothers reported new home sales last month were better than January sales for most of the last two decades.
2:13.0	New homes are gaining popularity partly because the cost of fixing up a fixer upper keeps rising says Jessica
2:19.0	louts at the National Association of Realtors.
2:22.0	41% of people who purchase a new property are actually doing so because they want to avoid the renovations.
2:29.0	Even with home builders benefiting from low inventory now, they'd much prefer to see lower mortgage rates.
	...

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