CEO of One of America’s Biggest Homebuilders Sounds the Alarm on a ‘Housing Slowdown’

By on December 5, 2018

From Business Insider:  Toll Brothers, one of America’s biggest homebuilders, warned Tuesday that the housing market is feeling the pain of rising interest rates.

“In November, we saw the market soften further, which we attribute to the cumulative impact of rising interest rates and the effect on buyer sentiment of well-publicized reports of a housing slowdown,” CEO Douglas C. Yearley, Jr. said in the company’s fourth-quarter earnings release.

“California has seen the biggest decline. Significant price appreciation over the past few years, fewer foreign buyers in certain communities, and the impact of rising interest rates all contributed to this slowdown.”

The Federal Reserve has hiked its key interest rate three times this year and signaled one more hike in December. Its benchmark for borrowing costs — the federal funds rate — now floats in a range between 2% to 2.25%, the highest since October 2008, right before Lehman Brothers imploded.

Pockets of the economy, like housing, indicate that higher borrowing costs are starting to bite.

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