Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses how the US housing market can be impacted by interest rate hikes and resulting higher mortgage costs. Ken says that while housing represents between 15% and 17% of US GDP*, only a small portion of this—slightly less than 5% of GDP—is more cyclical and therefore more vulnerable to higher mortgage rates: home building and remodeling.
While higher mortgage rates can slow existing home sales and activity associated with it, Ken does not believe weaker housing activity is likely to spur a recession in this economy. However, he points out that new construction and remodeling will likely face tougher pressures from higher mortgage rates.
*Source: NAHB. Housing’s Contribution to Gross Domestic Product. Accessed 12/23/2022
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